Coinbase (COIN) is lobbying Congress to establish clear regulations for the crypto industry. According to Coinbase CEO Brian Armstrong, there needs to be defined rules put in place by lawmakers rather than leaving regulation solely up to the Securities and Exchange Commission. Armstrong criticized the SEC's current approach of "regulation by enforcement", where crypto startups receive subpoenas without transparent guidelines, referring to it as "harassment." By pushing for legislative action, Coinbase aims to bring more clarity and certainty to the crypto space.
“I think there is a general consensus and understanding from both sides of the aisle that this is an important issue,” Armstrong tells Yahoo Finance adding, "in five years we'll be thinking how do we get this back on shore if we don't do something now."
Click here to see the full interview with Coinbase CEO Brian Armstrong.
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JENNIFER SCHONBERGER: And what are you hearing from lawmakers so far in the meetings that you've had?
BRIAN ARMSTRONG: Yeah, so we've had some really amazing meetings today with the highest levels of our government and lawmakers. And I think there's a general consensus and understanding from both sides of the aisle that this is an important issue. We can't keep having, you know, Americans be harmed and having this move offshore. This is going to be kind of like our 5G or semiconductor moment, where in five years, we'll be thinking, how do we get this back onshore if we don't do something now?
So the lawmakers I've spoken with are all high level aligned to this principle. It's kind of common sense. Let's make some clear rules. But politics, you know, are messy. And so these bills need-- we need to get people from both sides of the aisle to come together on a few little remaining issues like, for instance, is there a state pathway for stablecoins in addition to the federal pathway?
And I think we, as an industry, we're flexible, honestly. I think what-- there's a reasonable set of places where these rules could land. I'm OK with any of them. I just want there to be clear rules. Because in the absence of that-- you know, the SEC has just been on this path of regulation by enforcement or harassment, if you will, where every startup in the space gets a subpoena or a Wells Notice. And that's not sustainable, and it's not OK.
JENNIFER SCHONBERGER: To your point, the House Financial Services Committee passed a market structure bill this summer. It's expected to pass later this fall but dead on arrival in the Senate. Democrats sort of taking issue with the CFTC as the primary regulator there, among other issues. What's the risk that we don't have rules in 2024? Have you-- are you talking to Senate Democrats? What are you hearing specifically from Democrats?
BRIAN ARMSTRONG: Yeah, so actually, I would disagree with the idea that it's dead in the Senate. I think that-- Senators Gillibrand and Lummis, for instance, have put forth their own bill. They're thinking about this issue deeply. And what I hope happens is that we see this market structure bill and stablecoin bill that got bipartisan support in the House come to the Senate and dovetail into those efforts with Senators Gillibrand and Lummis, for instance.
You know, the risk is that if this doesn't happen-- and by the way, any piece of legislation, nobody can say for sure if it's going to happen. We're going to keep trying this again and again and again until something goes through. But if something doesn't go through, essentially, this is going to be decided by the courts. And right now, the SEC has kind of lost zero of the last three-- or they-- sorry, they've won zero of the last three court rulings.
So the courts are repudiating the approach that they're taking. And eventually, if this ends up in a Supreme Court, you know, that's not going to be good for many of what these lawmakers want. And so the clear path here is that it should go through the House and then the Senate. And the administrative branch put out an executive order about a year ago as well, saying we need something clearer here. So I hope that they can find alignment as well.