Coinbase CEO: Cryptocurrency is the "future of currency."

Zhitong App has learned that as optimism about the approval of a Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC) continues to rise, Coinbase (COIN.US) CEO Brian Armstrong expressed his outlook for 2024 in an interview, stating that cryptocurrency is the "future of money."

Despite regulatory obstacles, Armstrong pointed out that the price of cryptocurrencies has risen 90% this year. However, he stated that so far, the "unclear rulebook" has resulted in "consumer harm" due to many unresolved issues in the absence of clear regulation. Armstrong believes that the United States is "lagging behind" other countries in terms of cryptocurrency regulation, as standards from Congress and the courts are yet to be established.

Nevertheless, Armstrong remains optimistic about the continued adoption and promotion of cryptocurrencies. He believes that the approval of a Bitcoin ETF could stimulate renewed investment from investors and institutional capital, as well as increase awareness, although he warns that further policy clarity is still needed for cryptocurrencies to become a mainstream asset class.

Here are some other viewpoints expressed by Armstrong in the interview:

Outlook for the future of cryptocurrencies

We truly believe that cryptocurrencies are the future of money. Therefore, it is not just a speculative asset class. People are now using it for various types of practical purposes. We have always believed that this industry will develop under these three pillars. We think it will start as an asset class, where people engage in speculative trading. Then, it will become a new type of financial service, where people can make stablecoin payments and conduct business, remittance payments, earn income from their assets, and engage in DeFi lending.

Now we are even starting to see the third pillar come online, which is cryptocurrencies as a new type of application platform. This is what people refer to as Web3. It is a new way for people to build applications, a completely decentralized way, with decentralized identities, decentralized social networks, and decentralized scientific research. This is the future of the internet. So it is much bigger than people imagine, and they still think it is just an asset class. It is an exciting thing.

What is the reason for the recent surge in the prices of Bitcoin and other cryptocurrencies? Is it due to fundamental reasons or a traditional speculative behavior in the cryptocurrency field?

There are several factors. One of them is that the world's largest asset management companies and financial services companies have submitted many ETF applications. By the way, Coinbase has been named as a custodian, which is great.

But I think the market hopes and expects that we will see some ETF approvals in the first quarter. But more importantly, I think people's reaction this year is that cryptocurrencies will continue to exist. Think about the bad news, law enforcement actions. Some CEOs are going to jail. However, the price of cryptocurrencies has risen 90% so far this year. So I think this industry is sending a very clear message that this technology will continue to exist. 38% of young people, if you survey them, say they believe cryptocurrencies are the best way for them to gain new economic opportunities in their lives. 90% of Americans feel frustrated and uneasy about the existing financial system.

When will the Bitcoin ETF be approved? What changes will occur in the Bitcoin price once it is approved?

I believe myself and other industry insiders hope it can be achieved in early next year. However, the reality is that a large amount of new capital can now flow into these ETFs. In certain capital pools, there are restrictions or charters that do not allow them to register Coinbase accounts and directly own digital assets, but they can own ETFs.

So these are the world's largest capital pools, pension funds, endowments, hedge funds, and the like, and they may now be able to enter the crypto field. Now, just having a Bitcoin ETF is already great. You will be able to have exposure to Bitcoin. But I also think that this will bring many people into the cryptocurrency field, and they may want to trade and own other assets. They may want to use cryptocurrencies. They may want to generate returns from their assets or engage in institutional financing.

Therefore, I believe this is not only beneficial for Bitcoin, as it can bring in more capital pools, but also beneficial for Coinbase's existing business, for our institution it is Coinbase Prime, and for our retail customers it is Coinbase Retail. It will also drive activity and awareness there. So I think everything is good. Coinbase has a place in the value chain, being able to directly interact with customers and also serve as the custodian for the ETFs.

You have consistently emphasized the need for regulation. Do you think new laws will prevent the blowout that happened in 2022?

Yes, some rules are already clear. You have to comply with anti-money laundering, KYC rules, and the Office of Foreign Assets Control sanctions. I think this part of the ecosystem is already clear. But there are a lot of questions, and currently there are no legal answers to them. A good example is whether these assets are securities or commodities. When SEC Chairman Gary Gensler was asked this question by Congress, he couldn't answer it.

So these are the unsolved mysteries in this field. This basically drives a lot of offshore activities to unregulated platforms. As we have seen, these countries have had significant problems this year. This has caused great harm to consumers, including American investors. Therefore, without a clear rulebook, this industry will not be established in the United States, which is detrimental to the U.S. economy. But it is also not good for individual retail investors in the United States, as they have been harmed when investing in these unregulated products overseas.

Therefore, ideally, the first scenario is for regulatory agencies to work with the industry under the Administrative Procedure Act. They formulate rules and issue clear regulations. Everyone must comply with the same rules. This will enable the industry to thrive in the United States. Since this situation has not occurred, on the contrary, we have to rely on the courts to establish precedents through case law. Ultimately, I believe it is necessary for Congress to pass new legislation to clarify, you know, where the Commodity Futures Trading Commission and the Securities and Exchange Commission come in and what their roles are. So this is not a turf war, and the lack of clarity is pushing the industry overseas. The last thing I want to say is that I think the United States is actually falling behind. What I mean is that 83% of the countries in the G20 have already started to formulate cryptocurrency regulations and new laws. So the US is lagging behind. Currently, there are two bills under consideration in the House of Representatives and have received bipartisan support from the House Committee. We hope that these proposals will be voted on by the full House of Representatives early next year.

Do you feel that regulatory agencies are taking Jamie Dimon's comments about possibly banning cryptocurrencies seriously?

This is actually quite strange because although Jamie Dimon's comments are somewhat puzzling, internally at JPMorgan Chase, they are actually advancing several projects related to blockchain and cryptocurrency technology. It's a big organization. I think sometimes the left hand doesn't know what the right hand is doing.

In the United States, 38% of young people believe that this is an important tool for future economic growth. Opposing cryptocurrencies and attempting to ban them to that extent would be political suicide, right?