Founders and CEOs come and go in crypto's upper echelons. But is Brian Armstrong forever?
It's a question worth asking after the 40-year-old head of Coinbase has been on the job for more than a decade. In that time, he's outlasted most of his business partners as well as the competition to create the most important exchange serving U.S. crypto traders.
This profile is part of CoinDesk's Most Influential 2023. For the full list, click here.
Navigating the competitive crypto landscape
Now, Coinbase is finding potentially lucrative ways to enter new product markets, including the derivatives trading game. In mere weeks, it might begin custodying BTC for one of the many bitcoin (BTC) exchange traded funds (ETFs) waiting for regulatory approval. After all, Coinbase is the partner of choice for most of the issuers.
As for Armstrong's biggest business foes, well, they've been vanquished by his home country.
Before FTX imploded under the weight of its CEO's massive fraud scheme, Sam Bankman-Fried was planning to rewrite the rules of U.S. futures trading – an arena Coinbase entered just last month. Of course, it didn't end up quite how he envisioned it. SBF started FTX in 2019 and resigned in 2022.
And Changpeng "CZ" Zhao no longer poses a threat to Armstrong's top-dog stature. In November, Binance's king of crypto stepped down as part of a deal to atone for the wily exchange's past compliance sins. Binance remains the world's largest exchange, and therefore a competitor to Coinbase's global ambitions. But it will go forth without the input of the founder who put it there (Richard Teng, a relative unknown, is the new CEO). CZ started Binance in 2017 and stepped down this year as his company faced multiple investigations from U.S. authorities.
Armstrong, who started Coinbase in 2012, shows no signs of slowing down. Reached by email, he detailed several major accomplishments this year, starting with the launch of Base, Coinbase's popular Layer 2 (CoinDesk's "Most Influential 2023" also honors Jesse Pollak, Base's lead architect).
Coinbase also moved aggressively into crypto derivatives this year, with the launch of a new international exchange, and the facilitation of U.S. derivatives trading through its Coinbase Financial Markets service. "Derivatives make up 75% of global crypto volumes and the industry is in need of a trusted, regulatory compliant exchange like Coinbase to offer safe derivatives products," Armstrong told CoinDesk.
Coinbase's political and regulatory strategy
To be sure, Coinbase faces major headwinds, particularly on the regulation front.
This June, the U.S. Securities and Exchange Commission launched a major lawsuit against Coinbase, accusing it of operating an illegal securities exchange, broker and clearing agency.
The case is a key one for the whole crypto industry, which, by inference, faces the same accusations of massive securities violations. Coinbase finds itself as a standard bearer for the whole industry in its fight against Gary Gensler's SEC, which seeks to treat all tokens, bar bitcoin, as securities and therefore subject to the SEC's remit.
Against Gensler's depiction of Coinbase as profiting off crypto's wild west is Armstrong's vision of the company as something closer to a local sheriff. After all, Coinbase is one of the world's most tightly regulated crypto exchange companies by virtue of its listing on public markets, which happened in 2021. That moment capped years of compliance concessions that Armstrong says slowed its growth but was well worth it.
"It's more difficult and expensive to take a compliant approach. You can't launch every product that customers want when it's illegal. But it's the right approach because we believe in rule of law," he tweeted on Nov 21, after CZ pleaded guilty.
Now that crypto's "new chapter" has arrived, Armstrong is well poised to lead its public-facing front even more than he already has.
The bald-headed CEO has never been one to shy away from controversy. In late 2020, he declared Coinbase would be a "mission-driven company" that would not engage with its employees on social activism fronts, as many other Silicon Valley startups were doing at the time. Instead, he wanted employees to focus solely on Coinbase's commitment to crypto. This would be the single political area where Armstrong said Coinbase would engage.
Oh, did it ever.
In 2023, Coinbase and Armstrong pushed back in the perceived "war against crypto" with vocal calls to action against the U.S. agencies leading it. Whether it's compelling customers to flood troublesome IRS rules proposals with comments, or criticizing the SEC for regulating by enforcement, Armstrong is seeing his statement through.
The most important entrant to Armstrong's battle may be its non-profit, Stand With Crypto. Launched in mid-2023, the pro-crypto policy group's stated mission is to defend the entire industry from critics in America's halls of power.
The group is modeling its efforts around what's worked for the U.S.'s most influential advocacy outfits. Planned Parenthood and the National Rifle Association both grade politicians based on their commitment to niche political issues – a tactic that helps voters divvy up their donations as well as their votes. Stand With Crypto is doing the same.
"There's 52 million Americans who use crypto now," Armstrong said in a CNBC interview in late September, right after he chaired a Stand With Crypto event in DC. By his actions – if not his words – he was doing what he could to be the voice for this "major constituency."
"Coinbase was proud to help launch an independent movement known as Stand with Crypto that now has more than 100,000 advocates and unique tools that help connect advocates directly with their representatives to make their voices heard," Armstrong told CoinDesk via email.
Stand with crypto
It is worth remembering that Stand With Crypto serves Coinbase's business interests. This is a publicly traded company that seeks to grow by onboarding more people into its services, generating more revenue, boosting its share price for its investors. Regulatory clarity and Capitol Hill muscle could clear the field and get it done.
Regardless, it's not engaged (at least not yet) in the narrow kind of rulemaking lobbying that will predominantly serve ITS business interests, as FTX tried to do with commodities rulemaking. The fight that Coinbase and Armstrong are leading would likely pay dividends for the entire industry. It just so happens that Coinbase's number-one position means it stands to benefit the most.
Armstrong's efforts to crowdsource Coinbase's political influence points to the company's subtly shifting strategies. Undoubtedly it's one of the biggest crypto lobbyists in D.C., having spent $2.1 million through the first three quarters of the year.
"Now that some enforcement actions have landed, we have an opportunity as an industry to turn the page and write the next chapter of crypto adoption. I'm proud that Coinbase has always taken a compliant and trusted approach, and built for the long term, playing by the rules," Armstrong writes. "What keeps me motivated is that I'm passionate about economic freedom, and I can see that the technology underlying crypto is powerful enough that it will help bring this to the world. Crypto isn't going anyway, it's the future of money, and will become a greater share of global GDP over time," he said.
"With Layer 2, ETFs, and the Bitcoin halving next year, I'm optimistic for 2024."
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