In the crypto asset (virtual currency) industry, big name founders and CEOs come and go. But is Brian Armstrong forever?

It’s a question worth asking now that the 40-year-old head of Coinbase has been in the business for more than a decade. During that time, he saw most of his business partners and competitors leave and built the most important exchange serving American crypto traders.

survive fierce competition

Coinbase is now finding profitable ways to enter new product markets, including derivatives trading. In the coming weeks, it could be offering custody to a number of Bitcoin (BTC) ETFs that receive regulatory approval. Coinbase is the partner of choice for most issuers.

Mr. Armstrong’s greatest business enemies have been defeated by the U.S. government.

Before FTX collapsed under the weight of former CEO Sam Bankman-Fried’s massive fraud, Bankman-Fried had plans to rewrite the rules of futures trading in the United States. Of course, it didn’t turn out the way he had envisioned. Bankman-Fried started FTX in 2019 and resigned in 2022. Coinbase only entered the futures trading space last month.

Changpeng Zhao is no longer a threat to Armstrong’s top spot. Zhao, who was Binance’s CEO, stepped down in November as part of a plea deal to atone for Binance’s past compliance crimes.

Binance remains the world’s largest exchange and a rival to Coinbase’s global ambitions. But Binance will be restarting without any ideas or advice from the founders who established it. Zhao founded Binance in 2017 and stepped down this year as the company faced multiple investigations by U.S. authorities.

Armstrong launched Coinbase in 2012 and shows no signs of slowing down. When I spoke to him via email, he listed some of his major accomplishments this year, starting with the launch of Coinbase’s popular layer 2, Base. By the way, Base design director Jesse Pollak was also selected as one of CoinDesk’s Most Influential People of 2023.

Coinbase has also been active in crypto derivatives this year, opening a new international exchange and facilitating derivatives trading in the United States through Coinbase Financial Markets.

“Derivatives account for 75% of global crypto trading, and the industry needs trusted, compliant exchanges like Coinbase that offer secure derivatives products,” Armstrong said.

Coinbase’s political and regulatory strategy

To be sure, Coinbase faces significant headwinds, especially on the regulatory front.

In June, the U.S. Securities and Exchange Commission (SEC) filed a major lawsuit against Coinbase, accusing it of operating an illegal stock exchange, broker, and clearinghouse.

This case is also significant for the industry as a whole, which faces the same criticism of large-scale securities violations. Coinbase has become the standard-bearer for the entire industry in the fight against the SEC, led by Chairman Gary Gensler, which seeks to treat all crypto assets except Bitcoin as securities and bring them under the SEC’s jurisdiction.

While Chairman Gensler has criticized Coinbase for profiting from the Wild West-like lawlessness of crypto assets, Armstrong calls the company more like a “local sheriff.” I believe.

Coinbase went public in 2021, making it one of the most highly regulated crypto asset exchanges in the world. That moment was the culmination of years of compliance concessions, which Armstrong says slowed growth but was well worth it.

“Taking a compliant approach is difficult and costly. We cannot provide a product to our customers if it is illegal, even if they want it. But we believe in the rule of law and this is not the case. is the right approach,” Armstrong tweeted on Nov. 21 after Zhao pleaded guilty.

Now that a “new chapter” has opened for crypto assets, Armstrong will likely be leading the charge more than ever.

Mr. Armstrong has never been one to shy away from controversy. In 2020, he declared that Coinbase would become a “mission-driven company” and would not engage with employees on the social activism front, as many other Silicon Valley startups did at the time. he declared.

Reference article: Coinbase CEO’s “apolitical” policy – the essence and value of companies questioned in American society

Instead, they wanted employees to focus solely on Coinbase’s commitment to crypto assets. This is the only political area where Coinbase is involved, Armstrong said.

Did it really happen?

In 2023, Coinbase and Mr. Armstrong fired back, vocally criticizing the actions of the U.S. authorities leading it in what appeared to be a “war on crypto assets.”

Mr. Armstrong has consistently been involved in the politics surrounding crypto assets, such as inviting customers to comment on onerous proposed IRS (Internal Revenue Service) regulations and criticizing the SEC, which regulates through enforcement. There is.

The most important participant in Armstrong’s fight may be the nonprofit organization Stand with Crypto.

Launched in mid-2023, the pro-crypto asset policy organization’s mission is to protect the entire industry from crypto critics in the centers of American power.

The group is modeled after what has worked at America’s most influential organizations. Planned Parenthood and the National Rifle Association rate politicians based on their commitment to niche political issues. This is a tactic that helps voters distribute their contributions and votes. Stand with Crypto does the same thing.

“There are 52 million Americans using crypto assets right now,” Armstrong said in an interview with CNBC in late September, shortly after chairing the Stand with Crypto event in Washington, D.C. Ta. By his actions, if not his words, Mr. Armstrong was doing what he could to represent this “key constituency.”

“Coinbase was able to help launch an independent movement known as Stand with Crypto, which now has over 100,000 supporters and a unique tool to connect supporters directly with legislators and make their voices heard. I’m proud of that.” (Mr. Armstrong)

Stand with Crypto

It is worth noting that Stand with Crypto is contributing to Coinbase’s business interests. Coinbase is a publicly traded company looking to grow by bringing more people into its service, generating more revenue and increasing its stock price for investors. Regulatory clarity and influence in Congress could remove obstacles and accomplish goals.

However, Coinbase does not (at least not yet) engage in the kind of narrow lobbying that puts its own business interests first, as FTX has attempted to do with its commodity regulations.

The battle that Coinbase and Mr. Armstrong are leading will likely benefit the entire industry. And that would give the most profit to Coinbase, which is in the No. 1 position.

Mr. Armstrong’s efforts to crowdsource Coinbase’s political influence reveal a subtle shift in the company’s strategy. The company is arguably one of the biggest crypto lobbyists for American politics, spending $2.1 million through the first three quarters of this year.

“Now that several enforcement actions have been taken, we have an opportunity as an industry to turn the page and write the next chapter of crypto adoption. “I’m proud of the fact that we took a long-term view and followed the rules,” Armstrong said.

“What keeps me motivated is my passion for financial freedom and the realization that the technology underlying crypto assets is powerful enough to bring financial freedom to the world. Cryptocurrencies are not going away, they are the future of money, and over time they will become a larger part of global GDP.”

“With Layer 2, ETFs, and the Bitcoin halving, I’m optimistic about 2024,” Armstrong said of his outlook for 2024.

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: NFT image with Brian Armstrong motif (Mason Webb/CoinDesk)
｜Original text: Brian Armstrong of Coinbase Is Crypto’s Last Big Man Standing