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00:00In your view, will the FTX bankruptcy hurt the industry and maybe produce an enormous amount of regulation that you may not want? Well, I do think the FTX downfall is a bit of a black mark for the industry. And it's not representative of the whole industry, of course, though. And, you know, in traditional financial services, occasionally you see bad actors as well, like Bernie Madoff or what happened at Enron. Now, in terms of regulation, you know, I do think that it won't be a bad thing. We've actually Coinbase has been calling for clear regulation and trying to work with policy makers for quite a while. We've made some progress on that across various G 20 countries. But I think it will serve as a wake up call in sort of a moment of catalyst where we'll get more clear regulation in the United States. And I think that'll actually be a really good thing for both Coinbase and the whole industry. Sam Bank Manfred was first supposedly interested in having the CFTC, which regulates commodities, be the regulator for the industry rather than the FCC, which tends to regulate securities. Do you have a view on which is better for the industry and what you would prefer as the regulator? Yeah, so crypto is actually many different things. So there are some crypto commodities that should be regulated by the CFTC and in the future they may even want to regulate spot trading commodities, which doesn't happen in other commodities for crypto. Then the S.E.C. should be regulating crypto securities. And I actually think that could be a very important and big business in terms of how people raise capital for their business, for their businesses and investments, things like that in the United States and elsewhere. And then crypto is also many other things. You know, it has stable coins, which are more like currencies. It has artwork like NAFTA. And in the future, it's going to have even other things, you know, decentralized identity systems and new ways to build applications. So unfortunately, it's kind of like when the Internet first came out, people had wanted to think of it as one type of thing, but it turned out to empower many different types of use cases. And so there'll be different regulators for different aspects of the crypto economy. So for your company of people who are clients of Coinbase, you reassure them, I assume regularly or they can find out for sure if their account is managed the way it's supposed to. It's not being used for some additional purposes, right? That's right. I mean, we actually are very different than what happened with FTSE. So for one thing, Coinbase is based right here in the United States. We didn't incorporate in an offshore jurisdiction like the Bahamas. We're also a public company, which means we mean we need to meet all of the audit requirements of a public company. And so we show in our publicly audited financial statements that, you know, corporate cash is separate from customer funds and you don't have to take our word for it. You know you know, the big four accounting firm has come in and proven that in these cases. So there's there's other differences as well. You know, where we we operate an exchange, but we've never created an exchange token like the way RTX did. We never operated our own market maker or hedge fund in the way that RTX did, because we believed that that would be a conflict of interest. So the difference between the two firms, I think cannot be overstated. And it's really a validation of the approach that we've taken at Coinbase over the last 10 years to try to build this this business in a trusted and compliant way as opposed to what happened with FTSE. So how do you respond to the idea that many people don't know what they're doing when they're buying crypto currencies? They're not that well informed. They're very young and they're going to wind up losing their money because they're just not experienced. How do you respond to that concern? Right. I think that's a very valid concern across really any type of investment that people might make, not just in crypto, but in stocks and in everything. There's a lot of legislation being put through Congress now. And Coinbase has been very active in D.C. working with policymakers there. There's strong bipartisan support in the U.S. to actually get clear crypto regulation. The RTX situation created a little bit of a delay in the legislation that I was hoping was going to be coming getting passed in the next quarter or so. But I think within the next year, we can hopefully get something there in the US and then go for the rest of the G 20 as well.

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Coinbase CEO Sees Need for Clear Crypto Regulations

Brian Armstrong, chief executive officer of Coinbase Global Inc., says the FTX bankruptcy created a delay in passing crypto currency legislation but believes within the next year something will be done. He discusses the need for clear crypto industry regulation on "The David Rubenstein Show: Peer-to-Peer Conversations." This was recorded Dec. 6. (Source: Bloomberg)

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