It’s time we get crypto rules right in the United States

Tomorrow I have the honor of testifying on Capitol Hill about the urgent need for sound crypto rules before the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion. Ahead of that, I wanted to preview the main points I plan to make: (1) we need to fix our financial system now; (2) crypto and blockchain technology can address pain points with the financial system, but our current regulatory approach threatens U.S. leadership in this space; and (3) we need workable crypto regulation that protects consumers and promotes the benefits of crypto for everyone. 

First, it’s clear that our financial system needs improvements. A staggering 80% of Americans believe the financial system is unfair, and 67% believe it needs a serious upgrade. Crypto and the blockchain technology that underpins it can be part of the solution. In the United States and around the world, crypto is being transmitted instantly, securely, and at lower cost with just a phone or computer and an internet connection. In places like Ukraine, crypto has been a lifeline, offering monetary stability and an effective, scalable, and secure alternative to a financial system under strain since Russia’s invasion. Simply put, crypto – and blockchain technology – is helping to make our financial system better.

Second, the United States is at risk of losing its position as a global financial leader if we don’t adopt clear rules and regulations that embrace the potential of this next generation technology and foster its innovation. The rest of the world is not waiting for us. The European Union, the UK, Australia, Hong Kong, and Singapore are already putting in place regulatory frameworks that are creating high standards for crypto. While that progress is happening across the globe, the US is dragging its feet. If we want to maintain our global economic competitive edge, we need to bring crypto safely into the regulatory perimeter. We cannot afford to push the benefits and control of this technology overseas. Losing is bad for our economic future and our national security, full stop.

And last, but certainly not least, we need to protect consumers. Unfortunately, emerging technologies attract bad actors, and crypto has seen its fair share. We need clear and workable regulations that create a safe and efficient ecosystem for both crypto users and innovators. We absolutely cannot compromise on this. Blockchain technology can make the existing financial system work better, faster, and cheaper. But getting the rules right is essential to making this happen.

Coinbase has embraced regulation for over a decade. We communicate with lawmakers and regulators regularly – we even filed a petition for rulemaking with the SEC in July 2022. And we have done so while focusing on risk management, consumer protection, and transparency with our customers, market participants, and government authorities. As a public company, we disclose audited financial statements, our approach to managing risk, and how we safeguard customer assets. We believe our disclosures provide a baseline for what policymakers should expect from any centralized crypto platform operating in the U.S., including disclosures related to periodic financial reports, annual audits that meet U.S. public accounting standards, and identification of significant subsidiaries.

But transparency alone is not enough. We need clear rules that work for consumers interested in crypto and the innovators building creative solutions to improve our financial system and expand access to more people.  

As we move ahead, I urge lawmakers to embrace the transformative potential for crypto. Legislation and regulations should contain strong consumer and investor protection standards for digital asset intermediaries, create a registration pathway for offering digital asset securities and non-securities, and develop a comprehensive framework for stablecoins. The future of crypto innovation and America’s financial market leadership depend on getting this right. 

Read my full written testimony here.