ICYMI: Security and ATOs…

September 15, 2021 Coinbase

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ICYMI is an ongoing series of blog posts memorializing important Twitter threads from thought leaders at Coinbase and beyond. In this thread from 08/26/2021, Coinbase CSO Phillip Martin shares some ATO wisdom.

@SecurityGuyPhil

ATOs are a real problem. Nearly 25% of U.S. households have been victims, financial losses average $12,000, according to http://Security.org <.01% of Coinbase users experience these events, but they are the most complex cases we deal with.

We work hard to minimize ATOs on Coinbase, but the reality is attackers have a large profit motive and prey on both technology gaps (e.g. SIM swaps) and human psychology. It’s unlikely that any financial platform of any scale will ever be entirely ATO-free.

We know we have a lot of work to do to make the experience better for those customers who do experience an ATO, and we’ve launched live phone support immediately as a first step.

Ultimately, the best way for a consumer to protect themselves against ATOs anywhere is to use the strongest 2fa available (sms < totp < yubikey) and a password manager.

*We’ve added links where appropriate. You can see original thread here.

ICYMI: Security and ATOs… was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

ICYMI: Crypto Surveillance…

September 14, 2021 Coinbase

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ICYMI is an ongoing series of blog posts memorializing important Twitter threads from thought leaders at Coinbase and beyond. In this thread from 08/2/2021, Coinbase CLO (and ex-federal magistrate judge) Paul Grewal gives his thoughts on the surveillance provision in the infra bill.

@iampaulgrewal

When I was a federal magistrate judge, one of my most important jobs was to act as a check on government overreach. Especially when it came to surveillance. This new crypto surveillance provision brings back a lot of bad memories.

The Fourth Amendment applies to state action, not private action. But provisions like this allow the government to circumvent that pesky limitation, by putting the onus on private actors to collect data on the government’s behalf.

When that happens, and it happens in too much legislation, the liberties of the innocent are sacrificed at the alter of going after cheats, scoundrels, etc. It’s a massive cost, but a diffuse one, and so too often we all accept it in quiet as a cost of doing business.

We can do better than this. Yes, let’s get solid reporting requirements in place that flesh out tax cheats. But let’s not casually compel production of data on millions of innocent Americans when a more tailored solution is just as effective.

*We’ve added links where appropriate. You can see original thread here.

ICYMI: Crypto Surveillance… was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

ICYMI: USDC Reserves…

September 14, 2021 Coinbase

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ICYMI is an ongoing series of blog posts memorializing important Twitter threads from thought leaders at Coinbase and beyond. In this thread from 08/22/2021, Coinbase COO and President Emilie Choi clarifies the situation surrounding USDC reserves.

@emiliemc

Quick update on USDC. Starting September 2021, USDC reserves will be held in cash and short-duration US government treasuries. This is the approach we want for USDC reserves.

USDC has always been fully backed by reserves equal to or greater than the USDC in circulation, giving users the ability to always redeem 1 USD Coin for US$1.00.

We know that a lot of customers get USDC on Coinbase, and we previously said that every USDC is “backed by a dollar in a bank account.” Our language could have been clearer here.

When Circle shared their May report about USDC reserves in late July (which included a more diversified pool of investments for the first time) we should have moved faster to update statements like that on our website. That was a mistake and Coinbase takes ownership for that.

In any case, the changes in the investment portfolio for USDC reserves began in May 2021 and will not extend past September.

Centre, alongside Circle, will ensure that the USDC investments revert back to a more conservative investment profile by the end of September.

So to be clear, the next 2 attestation reports (June and July) for USDC reserves will show a diversified investment portfolio. This will reverse beginning with the month of August.

We’re excited about the continued growth and adoption of USDC, which has become the largest regulated stablecoin in the world, with a market cap of nearly $28B.

*We’ve added links where appropriate. You can see original thread here.

ICYMI: USDC Reserves… was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

ICYMI: Innovation vs. the Infra Bill…

September 14, 2021 Coinbase

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ICYMI is an ongoing series of blog posts memorializing important Twitter threads from thought leaders at Coinbase and beyond. In this thread from 08/06/2021 Brian talks about key moments for the future of crypto, including a recently proposed infrastructure bill.

@brian_armstrong

There are a few key moments that define our future. One is happening now in the Senate w/ the infrastructure bill. At the 11th hour Mark Warner has proposed an amendment that would decide which foundational technologies are OK and which are not in crypto. This is disastrous.

Senator Mark Warner has asked for proof of stake validators to comply with the impossible, but not proof of work miners. [Read about the differences between proof of work and proof of stake here.] Why? It’s not clear, but we could find ourselves with the Senate deciding which types of crypto will survive government regulation.

This is the government trying to pick winners and losers in a nascent industry today, where some new technology is being developed every month. They are guaranteed to get it wrong, by writing in a few exceptions by hand today.

Imagine if the government decided that iOS is OK but Android isn’t. And that software developers building on iOS can thrive, but Android is outlawed.

Our Senators are voting tomorrow on the future of innovation in finance and crypto in America. If they choose the Sen. Mark Warner amendment, we will see future development of blockchain technology move offshore to countries like China that are currently embracing it.

Crypto is still in its early stages. Innovators across this country are working to make crypto networks better, enabling new apps like NFTs, smart contracts, and DeFi. These will bring enormous benefits to Americans, and help ensure our place as a financial hub.

If the U.S. fails to embrace the innovation happening in crypto, it risks becoming a financial backwater, missing out on one of the fastest growing sectors of the economy. Imagine if we had missed out on the internet, and the largest internet companies had been built overseas.

This debate in the Senate started because the govt sees the growing crypto industry as a source of tax revenue. We agree everyone must pay their taxes. There is no debate on this topic. But destroying some of the most exciting innovations in the process is unconscionable.

History will not be kind to any politician who tries to block American’s access to new technologies. Americans have a very low tolerance for taking away our rights, and harming economic growth.

Contact your Senators and urge them to vote for the Wyden-Lummis-Toomey amendment and vote NO on the Warner-Portman amendment. Let’s keep crypto alive and thriving, we’re just getting started.

In Emilie Choi’s Top of Mind email on 08/09/2021, she also referred readers to a thoughtful blog post on the same subject by Fred Wilson.

*We’ve added links where appropriate. You can see original thread here.

ICYMI: Innovation vs. the Infra Bill… was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

ICYMI: Fun Fact from Brian…

September 14, 2021 Coinbase

ICYMI: Coinbase and the SEC…

September 10, 2021 Coinbase

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ICYMI is an ongoing series of blog posts memorializing important Twitter threads from thought leaders at Coinbase and beyond. In this thread from 09/08/2021, Coinbase CEO Brian Armstrong details recent interactions between Coinbase and the SEC.

Some really sketchy behavior coming out of the SEC recently. Story time…

Millions of crypto holders have been earning yield on their assets over the last few years. It makes sense, if you want to lend out your funds, you can earn a return. Everyone seems happy.

A bunch of great companies in crypto have been offering versions of this for years. Coinbase came out recently and said we would be launching our own version.

We were planning to go live in a few weeks, so we reached out to the SEC to give them a friendly heads up and briefing

They responded by telling us this lend feature is a security. Ok — seems strange, how can lending be a security? So we ask the SEC to help us understand and share their view. We always make an effort to work proactively with regulators, and keep an open mind.

They refuse to tell us why they think it’s a security, and instead subpoena a bunch of records from us (we comply), demand testimony from our employees (we comply), and then tell us they will be suing us if we proceed to launch, with zero explanation as to why.

Look….we’re committed to following the law. Sometimes the law is unclear. So if the SEC wants to publish guidance, we are also happy to follow that (it’s nice if you actually enforce it evenly across the industry equally btw).

But in this case they are refusing to offer any opinion in writing to the industry on what should be allowed and why, and instead are engaging in intimidation tactics behind closed doors. Whatever their theory is here, it feels like a reach/land grab vs other regulators.

Meanwhile, plenty of other crypto companies continue to offer a lend feature, but Coinbase is somehow not allowed to.

Gensler in his confirmation hearing: “It’s important for the SEC to provide guidance and clarity,” Gensler said. “Sometimes that’s a clarity that will be a thumbs up, but even if it’s thumbs down, it’s important to provide that.” March 2, 2021

If you don’t want this activity, then simply publish your position, in writing, and enforce it evenly across the industry.

Ostensibly the SEC’s goal is to protect investors and create fair markets. So who are they protecting here and where is the harm? People seem pretty happy to be earning yield on these various products, across lots of other crypto companies.

Shutting these down would arguably be harming consumers more than protecting them, and by preventing Coinbase from launching the same thing that other companies already have live, they’re creating an unfair market.

In May of this year I traveled to DC to meet with every regulator and branch of government I could.

The SEC was the only regulator that refused to meet with me, saying “we’re not meeting with any crypto companies”. This was right after we became the first crypto company to go public in the U.S.

Gensler had been confirmed just a month prior, so I brushed it off as the SEC still getting its feet under it. Now I’m not so sure.

We’ve always tried to be good actors in the space — leaning in to sensible regulation even when it is difficult or expensive. We try to think about what products we would want for ourselves, and what risks we would want our families to be aware of, before launching products.

We will keep following this approach.

Yet here, we’re being threatened with legal action before a single bit of actual guidance has been given to the industry on these products.

If we end up in court we may finally get the regulatory clarity the SEC refuses to provide. But regulation by litigation should be the last resort for the SEC, not the first.

Our door remains open. Hopefully the SEC steps up to create the clarity this industry deserves, without harming consumers and companies in the process. America could really use us all working together to figure this out right now.

*We’ve added links where appropriate. You can see original thread here.

ICYMI: Coinbase and the SEC… was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

ICYMI: Brian Goes to DC…

September 8, 2021 Coinbase

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ICYMI is an ongoing series of blog posts memorializing important Twitter threads from thought leaders at Coinbase and beyond. In this thread Brian talks about his trip to Washington DC.

One of my biggest takeaways is that the U.S. could really use a safe harbor/sandbox for crypto startups to get off the ground, before having to grapple with these issues. This would go a long way, and give the SEC/CFTC/Treasury/etc a common framework to follow. Also, a signal from the current administration that crypto companies are welcome in the U.S. would go a long way. -Brian Armstrong, 05/14/21

I spent most of [the week of May 14, 2021] in DC meeting with members of Congress and heads of various federal agencies, along with Ron Conway, Kathryn Haun and Paul Grewal.

[The] goal was to establish relationships and help answer questions about crypto. And to see what we can do to help the U.S. get more regulatory clarity in this space, as part of the newly formed Crypto Council.

Crypto is as important as the birth of the internet in terms of the jobs, GDP growth, and innovation it can create. The U.S. will need to be a major player in crypto to stay relevant long term. The reactions ranged from very positive (those who see enormous potential) like Senator Kyrsten Sinema and Congressman Patrick McHenry, to admitted skeptics who asked thoughtful questions about illicit activity and I think left with a much more open mind like Senator Mark Warner, and everyone in between. The politicians and agency heads I met with were all thoughtful and committed individuals, and I was happy to have our teams connected, and new friendships formed.

There is not a ton of regulatory clarity today in the U.S. because crypto is not just one thing. Some cryptos might be securities (SEC), some are commodities (CFTC), some are currencies/property (Treasury/IRS), and some are none of the above. So it’s a bit of a jump ball across existing federal regulators, and this means fewer startups who are able to brave the legal uncertainty. Some of them wind up founding their companies abroad, or not at all. This is a major problem.

Coinbase is big enough to afford the legal costs, and we’ve proactively created our own self regulatory frameworks when needed (for example Crypto Rating Council). Smaller crypto startups are more harmed because they can’t always afford it early on.

One of my biggest takeaways is that the U.S. could really use a safe harbor/sandbox for crypto startups to get off the ground, before having to grapple with these issues. This would go a long way, and give the SEC/CFTC/Treasury/etc a common framework to follow. Also, a signal from the current administration that crypto companies are welcome in the U.S. would go a long way.

Credit to Fred Ehrsam and the Crypto Council for Innovation for finding this gem — but watch this amazing video of the Al Gore and the Clinton administration announcing the Electronic Commerce Initiative in 1997. Al Gore outlines the government’s role to “first do no harm”, to applause, and sets the stage for a safe industry with appropriate consumer protection. Think about the downstream effects we have today of this signal they sent to the market.

Side note: great example of why government is best suited to set the legal and policy frameworks, but not try to pick winners. The two companies they chose to represent the future of the internet were IBM and another one I haven’t heard of!

I also relayed my thoughts on China and their central bank digital currency. It is real, they are moving quickly on it, and I believe it represents a threat to U.S. reserve currency status long term if the U.S. doesn’t move quickly to create their own.

Coinbase provides services to customers in over 100 countries around the world, and we’re seeking to speak with policy makers everywhere. But our parent company is based in the U.S. and I’d love to see the U.S. embrace the exciting use cases of this new industry. Including banking the unbanked (and underbanked), which crypto has the potential to do (especially self-hosted wallets).

Coinbase stands ready to help as a resource for all those who would like to learn more about crypto, and help drive toward regulatory clarity, and innovation.

Here are a few fun photos — I only got permission to post a few (there were a lot more meetings where I didn’t!).

Left : U.S. Speaker of the House Nancy Pelosi in a full orange pantsuit with a silk scarf stands between Coinbase CEO Brian Armstrong in a blue suit and tie and Silicon Valley “Super Angel” Investor Ron Conway in a black suit and blue tie. Right: Coinbase CEO Brian Armstrong stands in a blue suit and tie next to former Speaker of the House Paul Ryan wearing a grey suit, blue tie, and American flag lapel pin.

Btw Coinbase is committed to being bipartisan in any policy efforts.

The U.S. is at a critical juncture in making holistic decisions around cryptocurrency. Imagine the U.S. without the internet.

If you’re a policymaker interested in learning more, reach out to: info@cryptoforinnovation.org

*We’ve added links where appropriate. You can see original thread here.

ICYMI: Brian Goes to DC… was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

ICYMI: Coinbase is Part of Pledge 1%…

September 8, 2021 Coinbase

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ICYMI is an ongoing series of blog posts memorializing important Twitter threads from thought leaders at Coinbase and beyond. In this thread Brian talks about Coinbase’s dedication to increasing economic freedom in the world through non-profit work in addition to our for-profit work.

A Twitter thread from Brian Armstrong on May 24, 2021:

This didn’t get much attention, but I’m proud to say Coinbase is part of Pledge 1%. This means we are allocating 1% of equity, profit, and employee time toward our non-profit foundation [Coinbase Giving]. 1% of equity means this is going to be an enormous foundation…

There was a big push I made for this in 2020, which required full board support (to their credit there was 100% support). We’re actually doing 0.1% equity per year for 10 years. It gives us a ton of resources over time to allocate toward….

Projects like GiveCrypto.org
Open source developers working on the underlying blockchains & protocols
Training more people to work in the cryptoeconomy

The for-profit work we do is still 99% of our efforts and where the vast majority of our contribution to the world will come from. But some efforts are best done through a non-profit (like giving small amounts of crypto directly to recipients in need all over the world).

So the two are very complementary toward achieving our mission as a company.

We’ll also be doing an employee match program, on donations to any charities that employees want to support.

*We’ve added links where appropriate. You can see original thread here.

ICYMI: Coinbase is Part of Pledge 1%… was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

ICYMI: A new blog series memorializing great Twitter threads and more …

September 8, 2021 Coinbase

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ICYMI: A new blog series memorializing great Twitter threads and more …

I like to tell my team: If you can’t ignore the hype while things are trending up, then you can’t ignore the despair when things are trending down. We need to develop resilience, ignore the noise, and continually make forward progress on our mission. -Brian Armstrong 05/14

ICYMI: A special anniversary message from our CEO

On May 14, 2021, just weeks after the announcement of our Nasdaq listing, Brian took to Twitter to reflect on his experience launching Coinbase and sticking to his mission through the good times and the bad.

A thread …

9 years ago today, I founded Coinbase. One of the most important lessons I come back after all this time is long-term focus.

I’m grateful to see how far crypto has come since Coinbase was founded. Hard to imagine that only 9 years later we would see crypto regularly discussed by Presidents, Saturday Night Live hosts, and Tom Brady. Or that it would show up in songs by Nas.

It’s tempting to get caught up in the excitement of the current moment, but the truth is there have been many ups and downs of the 9 years.

It was during the company’s low periods that I worked to find balance and avoid getting distracted. It was only because of perseverance and focus that we made it through those hard periods where we lost many employees, partners, or public support.

Importantly, we had to maintain that same mindset during the periods of excitement around Coinbase and crypto. There are just as many risks to getting caught up in your own hype as there are in giving up when times are tough.

Times feel good right now. But when this current cycle ends we may see crypto prices fall, and some people will become disillusioned and walk away from crypto (again).

It makes no difference to me; we will keep building and moving forward, because I want to see a world with more economic freedom, and this is the best opportunity I see to create it.

I like to tell my team: If you can’t ignore the hype while things are trending up, then you can’t ignore the despair when things are trending down. We need to develop resilience, ignore the noise, and continually make forward progress on our mission.

This has served us well over the last 9 years, and I expect it will continue to do so over the next 9 years. In terms of long term focus, we are still at the very beginning of this journey.

Let’s keep building!

*We’ve added links where appropriate. You can see original thread here.

ICYMI: A new blog series memorializing great Twitter threads and more … was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

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