Yahoo Finance

Coinbase stock surged nearly 24% Tuesday as Wall Street cheered the inclusion of the first and only crypto exchange in the S&P 500. Yahoo! Finance's Jennifer Schonberger standing by on Capitol Hill with more. Hi Jennifer.

Hi Maddie. This afternoon, I caught up with Coinbase CEO Brian Armstrong to talk about his company's inclusion into the S&P 500, as well as that Senate stablecoin bill that failed in the Senate last week. Armstrong telling me he's actually optimistic about the prospects for the bill, and thinks that it could see a revote as soon as this week. We kicked off the conversation talking about what the inclusion of Coinbase means for the S&P 500 and for the crypto industry at large. Take a listen.

Yeah, well, Coinbase joining the S&P 500 means crypto's here to stay. It's going to be in everybody's 401k. Everyone's going to have crypto exposure, you know, at least indirectly through Coinbase, which is great. And it's also a symbol that crypto is updating the financial system, right? We actually launched our own coin 50 index, which is the top 50 coins by market cap. I hope someday companies are going to graduate and getting in that index will feel as good as it feels for us getting in the S&P 500.

And today is "Stand with Crypto" day. You're here on Capitol Hill. You've been speaking with lawmakers. At a time when the stablecoin bill in the Senate seems to have hit a roadblock, what are you hearing on that? Do you think this bill can be resurrected? Can we see passage on this bill?

Yeah, I'm actually pretty optimistic this bill can get done. There's a lot of urgency on both sides of the aisle to see this come to fruition. There's 52 million Americans who own crypto. They elected representatives in this last election. They showed up in a big way that they want to see this legislation happen, and I think the Senate realizes that. So, there's, like any good negotiation, you know, there's always a debate at the last minute about what the language is. And the details really matter to get this right. I can get into some specifics if you want, but we've been meeting with folks on both sides and underscoring the urgency of how important it is to get this legislation passed here in America.

What are you hearing that could see you could see change basically in this legislation that would get it over the hump?

Yeah. Yeah, well, there's a couple nuanced points. I mean, one area that I've talked about publicly is that I don't think there should be any sort of prohibition on paying interest or yield on stablecoin assets. You know, the banks, I think, need to have to compete on a level playing field. There's concerns out there about, you know, what will this do to credit markets, you know? There's already high high yield checking accounts, and this is not something novel. And crypto can offer lending solutions as well. So, we believe that, you know, the government shouldn't really be doing protectionism for one industry versus another. They should publish clear rules and have a level playing field for competition. Another example would be, you know, AML laws are very important, and today crypto intermediaries like exchanges, like us, are regulated under those. But we want to make sure that the AML laws don't get dramatically expanded to include non-financial services like DeFi protocols. And so that was an important data discussion point for that bill as well. But I think it's heading toward a positive language that, you know, both sides probably have to always feel like they give something up in a good negotiation. But from what I'm hearing, there seems to be a consensus forming, and I'm I'm hopeful that this vote will happen maybe tomorrow or early next week.

Right. We'll have to talk to lawmakers on that front. I wonder though, you mentioned the banks. If banks are able to create their own stable coins, what are the implications there? Do you have any concerns?

No, we think everybody should be able to create stable coins. We think that crypto is a technology to update the financial system, and we want every bank, FinTech company, every payment company to be integrated. And it's really exciting actually seeing the adoption of stable coins and payments recently. You know, USDC is a has seen incredible, it's the fastest growing large stable coin in the world right now. And we're building products and services that power B2B payments where, you know, it dramatically lowers the time and the the cost for businesses to just participate in the economy. So, we we actually think that the majority of all payments in the economy at some point will be running on stable coin rails.

And let's talk about what that means in terms of the future for your company. But before that, I was curious if I could get a bit of clarification on a couple weeks ago. We heard from one of the spokespeople at your company that a banking license was under active consideration. Then on the earnings call, you said that wasn't really an idea you wanted to pursue. So, could you clarify whether Coinbase is looking to adopt a banking license or not?

Yeah, well, in the current drafts of the legislation again, I mean, we haven't seen the final text, and so we don't know exactly how it's going to turn out. But the current drafts that we believe will be there aren't going to require us to have any kind of banking license. So, at this time, we don't have any need to or desire to pursue that, but obviously, if something were to change in the law, we could always consider that.

And, like you said, just laying the groundwork here with this new legislation and the market structure legislation that's also under consideration in the house, what do you see as the future for Coinbase? What are the big goals going forward? I know you mentioned becoming an all things to all people financial services provider. As you get into seeing this platform evolve and sort of connecting with all of the various opportunities for crypto, how early are you in the innings here?

Yeah, it's still very early. I mean, we our long-term goal is we want to be the largest financial service app in the world. We want to do that for retail customers, also for businesses, for institutions, for developers who are integrating this into their applications. So, we serve different customer segments, and we're doing this now in about 100 different countries. We're working on a lot of international expansion. So, our our long-term thesis is that crypto is eating financial services, and we're going to be the leader in crypto.

And back to the proceedings here on Capitol Hill, when it comes to that market structure bill, what are you hearing on that front? What's your message to lawmakers there? What do you really want to see from that bill?

Yeah, well, a lot of focus right now is on stablecoin just because that's the moment that we're in. But we've underscored to them that we think the market structure bill is actually even more important because stablecoins are great, but they're really just a small piece of what what is happening in crypto. The key part of the market structure bill, in my mind, is that it's actually helping clarify which of these assets are commodities and which are securities. That was the big thing that was unclear in the past that got weaponized against the industry in my view. And so, if we have that CFTC spot market authority for commodities, that's that'll be a huge piece of clarity. And then we also believe there should be a path to register crypto securities for people who want to raise money, start a company, to you know, create a piece of real estate like an apartment complex, or to make a movie or a film or something. So, we want to actually build products and services that help people register a crypto security and raise money like capital formation could be much more efficient in the global economy with crypto rails, but we need regulatory clarity to go do that.

And before I let you go, now we have a new SEC chair in place, Paul Atkins. Have you spoken to him? Have you spoken to the SEC now? How are they helping you under this new new administration lay out the groundwork for regulatory clarity that you're looking for to do what you need to do with you said?

Yeah. Yeah, well, so far, the SEC has been very thoughtful on this. We've met with the SEC task force several times to discuss things like, how might tokenized securities come into effect and get these other asset classes on chain. And Paul Atkins is somebody who I've met with in the past. Looking forward to spend more time with him now that he's confirmed. But from what I've seen, he's going to be very thoughtful and constructive on these issues.

Brian, thank you so much as always for your insights. So appreciate it.

Thank you.

And we are hearing on Capitol Hill today that we could be getting amended text on that stablecoin bill sometime today. You heard Armstrong tell me in the tape that we could be getting a vote on that legislation as soon as this week, though Republican aid telling me that discussions are ongoing, and if those leaks are coming from the Democratic side, that is leaks of optimism for a vote this week, then it's hopeful that they could be narrowing the interest on a potential amendment, perhaps we could get over that hump here in the next near future. Back to you.

Jennifer, fantastic interview. Great job bringing us that conversation. Really appreciate it. Thank you.