Welcome to Future of Finance, where Fortune asks prominent people at major companies about their jobs, how their firm fits into the crypto ecosystem, and what it all means for how we use money.
Just when crypto legislation was gaining steam in Washington, FTX’s collapse and the arrest of former CEO Sam Bankman-Fried stained the industry’s reputation and made many lawmakers unwilling to engage. Nearly a year later, things are starting to look up and Coinbase is helping lead the charge to advocate for crypto in D.C.
After its NFT shield mint raised $215,000 for crypto advocacy organizations earlier this year, the company helped start the independent Stand with Crypto Alliance as a nonprofit meant to inspire grassroots support in the U.S.
Fortune caught up with Coinbase’s chief policy officer, Faryar Shirzad, to learn more about what the company is doing to help advance crypto legislation and how lawmakers’ opinions have shifted since FTX’s downfall.
(This interview has been edited for length and clarity.)
I wanted to start off with just asking you a little bit about your background, your career, and how you first got interested in crypto.
I have a very Washington career. I grew up, professionally, kind of always around public policy and government issues. I was a lawyer for a number of years. Then I was a staffer on the Senate Finance Committee, working on international trade matters. I then went to the Bush-Cheney transition team and managed the transition between the Clinton and the Bush administrations, then had a number of roles in the administration.
I was at Goldman Sachs for a number of years before I came to Coinbase, and I obviously heard about crypto like most people do. But I didn't really dig deep into it until I was having conversations with Brian Armstrong and Emilie [Choi] and others at Coinbase about coming over. And the more I dug into it, the more I was intrigued and wanted to be a part of figuring out the public policy around crypto.
The Stand with Crypto Alliance just launched. Can you tell me a little bit more about that group and the idea behind it?
We’ve done surveys and there are about 50 million Americans who’ve bought crypto at some point. It's a gigantic portion of the population. More Americans have bought crypto than have union cards, than own electric vehicles, or do many of the other things that people have much more front-of-mind. What we learned in the course of the conversations we've had with policymakers around D.C.—and elsewhere—is there's almost no awareness of how broad and prevalent crypto adoption is in communities all around the country—a very demographically diverse set of the population. Perhaps it skews a bit younger, but it's Democrats, Republicans, it's urban, it's rural. And it dawned on us, ultimately, that until these people had a chance to be a part of the political debate around the future of crypto in the United States, that it was going to be very hard for us to make the case with policymakers who just couldn't get their minds around the technology.
So we helped start this organization, Stand with Crypto, essentially as a place to build a grassroots community of crypto enthusiasts who want to be advocates to help policymakers understand that the stakes are quite high in terms of getting crypto regulation right. The reaction has been beyond my wildest imagination. We already have about 100,000 people who've signed up. And the Stand with Crypto organization, which is an independent organization that we've helped launch and fund, is already up and running up, organizing events, doing grassroots meetups. They're very in the early stages of all of this, but it's gonna be quite exciting to show how crypto is such an integrated part of American society. Policymakers need to be aware of that.
What else can you tell me about the Stand with Crypto NFT mint?
Initially, the shield mint was allocated to a number of organizations that advanced crypto policy. Since we first did the mint shields, we created the Stand with Crypto organization and the funding now goes directly to Stand with Crypto—this independent entity. We've obviously funded the organization ourselves, in terms of making our corporate contribution, but the idea is that—through a variety of means—Stand with Crypto will begin to generate its own revenue from its members, and that will help pay for a lot of the grassroots political activity.
What has been Coinbase’s approach, generally, in working with lawmakers in D.C.?
Our primary approach has been to educate, to meet policymakers where they are on their crypto journey—which for most of them is almost nowhere. But I've done public policy, and I've never had a field or an area that I've worked on where it happens so often that you walk into a room with a policymaker, and it's inevitable somebody in the room—a staffer or maybe the policymaker’s family member or something—is deep into crypto and talks about it. So conversations with policymakers, generally, almost always start with an enormous amount of interest to learn more.
It’s on us at Coinbase and on others in the industry and with the grassroots population to help policymakers understand, “What is crypto?” “Why does it matter?” “Why do we need to get the public policy right?” I think once we have those conversations, things inevitably land in a much, much better place.
We're lucky that it's not a partisan issue. There's some policymakers who are very hostile to crypto—Elizabeth Warren would probably be at the top of that list, Gary Gensler at the SEC—but generally, it's not a partisan issue. Democrats are pretty open-minded about this, Republicans are as well, but there's an educational need that we have to embrace and take on as a community and an industry.
Are there any unique difficulties in advocating for crypto in D.C.?
I wouldn’t call it a difficulty, but one feature which I love, which actually requires a lot of time, is that there's a community out there. And it was actually a big part of my conversations with Brian Armstrong when I was talking to him about joining Coinbase. It was very much front of his mind, and I was lucky to understand it quickly and embrace it.
But much more important than any individual company are the millions of Americans who have embraced crypto and adopted it in their daily lives. I know Brian does, and I do for sure, feel very accountable to that community. I was never on X, or Twitter, before I came to Coinbase. I'm on there. I'm fairly active—not because I've necessarily always felt like I wanted to be public like that, but there’s a dialogue that we all in crypto have to maintain with the community. That's a unique feature of crypto, but it's a wonderful one.
How has the dynamic changed in speaking to policymakers compared with before FTX collapsed?
Yeah, I would say, in broad terms, there's three phases of policymaker attitude. Pre-FTX there was curiosity, but general open-mindedness to learn more. But there was a lot of work we all had to do to educate policymakers.
Post-FTX there's been—and I’m talking about the political audience—a huge reset, and maybe particularly so with Democrats, in terms of worries about the sector, and the bad criminal behavior of folks like Sam Bankman-Fried and others. It has been a real issue that we've had to take on as an industry to kind of show, demonstrate, and explain how there's so many of us out there building legal, compliant, regulated, transparent, audited, publicly listed crypto companies in the United States.
I think we're now, over the last few months, working out of that whole Sam Bankman-Fried/FTX period. And now people are back into a general open-mindedness about crypto wanting to kind of roll their sleeves up and figure out how to do the right thing. And I think we as an industry are doing a better job of presenting ourselves.
So has the industry, and Coinbase to some extent, shaken off that stigma?
I think so. There's an irony to it right? Because FTX was an offshore entity—unregulated. And so, it has been a source of frustration because the very thing that we want regulation to deal with, offshore unregulated players, is being used as a way to punish the domestic industry. But I think people are now getting past that. I always say to policymakers, “If you're for crypto, you should be for federal regulation of centralized players, and if you're against crypto, you should be for federal regulation and oversight of centralized players.” Both roads should take you down to the same outcome.
I can see the logic of that beginning to set in. Even though the [Biden] administration has been mixed on the issue, they are officially on the record as wanting stablecoin legislation and crypto commodity legislation in terms of giving the CFTC spot market authority over crypto commodities. So they're nominally in the right place—it's just a matter of making sure crypto fits into the priority list.
Are you optimistic about pending crypto proposals—or similar legislation—getting passed?
Yeah, there's absolutely no question that legislation will get passed. It's just a matter of when. For people like me who have been through years and years and years of legislation, you understand that there's a lot you can control, and lots and lots that you cannot control. I always smile a bit when I hear people saying, “Oh, legislation is hard, it's not going to happen,” because that's the base case. If we're trying to rename a post office, you could say that and probably be right. If we're trying to even pass the budget or pick a [House] speaker, it's a hard thing.
What should be top of mind for legislators?
The first thing that should be top of mind is that 83% of the G20 has already either adopted or is in the midst of adopting crypto legislation. They should also keep in mind that it's become a part of the national strategy of a lot of major economies—the EU, U.K., and maybe, most importantly, China—to adopt digital asset innovation into their financial system and into their national technology strategies.
We're losing about 2% market share in open-source coding and developer talent to other markets every year. The geopolitical context in which crypto operates—the global competition that's underway—is something that I think a lot of policymakers have no idea is happening. And I worry that we're in a 5G moment or a semiconductor moment, where we'll take an area where we were undisputedly the leader, put it in a package, put a bow on it, and hand it to other countries, including the Chinese.
Where does crypto fit into national security?
National security is a lot of things. For sure, it’s military strength, but it's also very much a product of your economic strength and your leadership in technology and innovation. Crypto technology is one of the key components—the modernization of the financial system that's occurring around the world as we speak. Crypto is the next iteration of the internet. The ability to not only move information but also to move value is what crypto brings to the table. And so the two big pillars of our national security—our economic and financial strength, and our technology and innovation strength—are really what's at issue. The use cases are developing, the applications are developing, but they should be developed here.
What's the future of finance?
I think the future of finance is similar to the future of society. I think it'll move increasingly online and then ultimately on-chain. I think the role of being intermediaries in society has diminished and we operate much more autonomously and much more independently. And I think that's where finance will go. The big intermediaries will remain in some aspects of finance, but in many other aspects, the fact that we can more cheaply, more resiliently, with less risk, move assets among ourselves just as easily as I could text you, is inevitably going to be incorporated into the financial system.
It'll be a very different architecture—the regulations will have to adapt to it—but we’ll ultimately have a cheaper, simpler, more accessible financial system. It'll be more democratic. It'll be on-chain, and people will be able to organize themselves in much more effective ways. And it'll happen in a way that allows the tens of millions of Americans who can't even get access to a bank account to be able to participate in our economy—which I think is super important—and same for the billions of people outside of the United States, who can't even begin to imagine having access to the things that we in the United States take for granted. It will be a dramatic step forward in giving people the ability to control their finances and have some ability to chart their economic future.
