Mar 5, 2024 · 18m · a16z
Regulating Crypto in the Name of National Competitiveness
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In an a16z American Dynamism conversation, host Ben Horowitz and Coinbase COO Emilie Choi discuss the urgent need for clear U.S. crypto regulation to protect national security, drive financial inclusion, and foster technological innovation.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The host as informed peer 2.0 Guest teaching 4.4 Guest disagreement 1.6 The host pushing back 0.0
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 2:42 Calling out SEC and FTC overreach
Emily directly attacks regulatory agencies, labeling the SEC and FTC overzealous and accusing them of overstepping boundaries to block mergers and issue unfair Wells notices.
Hardest push from the host ▶ 9:14 Challenging the value and naming of non-Bitcoin cryptoBen challenges the premise that non-Bitcoin tokens are necessary, asking whether 'cryptocurrency' is just poor naming by technology insiders.
Biggest teaching moment ▶ 6:37 Dismantling illicit finance claims with statisticsEmily educates the room by pointing out that less than 0.5% of crypto transactions are illicit compared to 3-5% of cash, noting even terror groups dropped Bitcoin due to traceability.
The host holds their own ▶ 5:20 Citing low-income banking overdraft statisticsBen demonstrates domain insight by citing statistics on low-income Americans spending more on overdraft fees than on vegetables to illustrate traditional banking failures.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| National Security Risks of Offshore Crypto Development | 1 | 4 | 1 | 0 | Ben tees up friendly questions about crypto moving offshore, allowing Emily to lay out statistics on national security threats and developer migration. The host offers no pushback and asks supportive follow-ups. | |
| Regulatory Overreach and Overzealous Agencies | 2 | 4 | 2 | 0 | Ben asks how crypto regulations differ from early internet rules and shares a stat on banking overdraft fees versus food costs. Emily outlines regulatory overreach by the SEC and FTC while detailing Coinbase's business structure. | |
| Debunking Illicit Finance Myths in Crypto | 2 | 5 | 2 | 0 | Ben prompts Emily on anti-crypto narratives regarding illicit finance, leading Emily to debunk the myth with comparative statistics on cash versus crypto. The host agrees with her conclusions and asks about political motivations. | |
| The Tokenization of Real-World Assets Beyond Bitcoin | 2 | 5 | 1 | 0 | Ben questions the necessity of non-Bitcoin tokens and asks why Coinbase became politically active. Emily explains the tokenization of assets and details grassroots political initiatives like Stand With Crypto. | |
| Impact and Legitimacy of Spot Bitcoin ETFs | 3 | 4 | 2 | 0 | Ben highlights Coinbase's strong compliance record compared to fraudulent industry actors, reinforcing Emily's points. Emily explains the institutional impact of Bitcoin ETFs and advocates for legislative clarity via Fit 21. |
Statements from this episode (17)
Choi: U.S. falling behind in crypto mirrors failures in chips and 5G
“I really think it's a travesty and I think the US falling behind on crypto is not dissimilar from what we've seen with chips and what the, what we're having to do now with the chips bill. I think it's like five G. I think it's a national security issue and thr…”
Choi: 80% of G20 nations have enacted or drafted crypto regulations
“For example, 80% of the G-twenty Now either has enacted or is in the process of enacting crypto legislation and regulation, and we just haven't done anything here.”
Choi: 70% of cryptocurrency developers are now based outside the U.S.
“And so the net result is that 70% of crypto developers are now offshore, and thus the technology and data will continue to be built offshore.”
Choi: Coinbase's Stand With Crypto organization has over 275,000 advocates
“You know, we have an organization called Stand With Crypto that has more than 275,000 advocates for crypto.”
Choi: U.S. financial regulators like the SEC are overstepping statutory boundaries
“What makes out a very bad idea is that we have overzealous regulators such as the SEC who are overstepping their boundaries.”
Choi: The FTC is overstepping antitrust authority and blocking tech M&A
“We've seen with the FTC that they're overstepping on antitrust and thus not enabling any M&A to happen.”
Choi: Coinbase is the custodian for eight of 11 approved crypto ETFs
“We were named as the custodian of eight of the 11 approved ETFs at this point.”
Horowitz: Low-income banked Americans spend more on overdraft fees than vegetables
“If you're kind of middle to low income and you're banked, you spend more on overdraft fees than on vegetables.”
Horowitz: Crypto is the most inclusive financial technology ever created
“It's probably the, it's by far the most inclusive financial technology we've ever had.”
Choi: Less than 0.5% of crypto transactions are illicit
“Less than one percent, usually less than .5% of crypto transactions are deemed illicit, whereas it's estimated that three to five percent of cash transactions are illicit activity”
Choi: Hamas stopped accepting Bitcoin donations because the blockchain is traceable
“And, you know, even Hamas, like, I think in like, 20, 22, 23 announced that they were no longer gonna be accepting Bitcoin because it was too traceable.”
Choi: Anti-crypto politicians want to protect banks and force trackable CBDCs
“I think there's an element that is trying to promote an agenda either to protect the traditional banking system Or potentially to foster the adoption of a CBDC or something where every citizen's transactions are tracked and monitored in a way that I think most…”
Choi: All real-world assets will eventually be digitized and tokenized
“I think it's actually a store of value, but there's other assets, and I think the way to think about this is that the world is going to be tokenized, so we have more than 200 assets on our platform whether that's ETH or Solana or others, and It could be an NFT…”
Choi: 52 million Americans currently hold cryptocurrency
“I mean, one of the things that blows people's minds when I tell them, there's fifty-two million Americans that hold crypto.”
Choi: Coinbase operates the exact same business as its 2021 SEC-approved IPO
“As Ben mentioned, we went public in 2021 under the auspices of the SEC. We have substantially the exact same business that we had, had in 2021 when we went public under them.”
Choi: The FIT21 bill splits crypto jurisdiction between the SEC and CFTC
“There's a bill called Fit 21, which was sponsored by Patrick McHenry. It's a very simple bill, and elegant in that way, in the sense that it just simply says that the SEC would have jurisdiction over digital securities, and the CFTC would have jurisdiction ove…”