Coinbase CLO: CLARITY Act passes by summer

Added: 2026-05-09

[00:00:11]We're here at Consensus for another special interview. I'm joined by Coinbase CLOO Paul Grill. Uh Paul, it's fantastic to finally meet you in person.

[00:00:19]I've been in the industry for a long time, so it's it's nice to finally sit down with you. I think first and and foremost let's talk about the biggest sort of news piece that has happened and that was um you know Senator Tom Willis and Angela also Brooks issuing a statement on the the Clarity Act and for our audience and perhaps people that haven't been so clued into what's going on. Can you talk about their statement and what's actually happening with the Clarity Act going forward and why this might be very good news for our industry?

[00:00:45]>> I'm happy to do that but before I do let me first say thank you for having pleasure to meet you in person as well.

[00:00:50]Well, the compromise that was crafted by U. Senator Tillis and Senator Alsbrooks is focused on rewards and striking a balance between the important value that rewards serves in the stable coin indeed the broader crypto economy and um concerns raised by the traditional banking industry. Uh however groundless and meritless that nevertheless needed to be addressed. And what the compromise ultimately holds is that rewards u issued by intermediaries including Coinbase but also including many others may not be based simply on a balance in an account. What the banks have sometimes referred to as idle yield.

[00:01:31]Critically though critically the compromise protects and preserves the ability of intermediaries to offer rewards that are based on activity on platforms such as ours. And those activity based rewards are critically important to uh encouraging incentivizing adoption of stable coins and their use in all sorts of different uh uh circumstances. So we think that Senator Tillis and Senator Also Brooks have recognized that uh two things can be true at the same time. compromise sometimes in Washington may be required, but it's also critically important that we not discourage the adoption of this important new technology uh in the form of payment stable coins or its use in all sorts of cases that we think will be greatly beneficial to the American public. Um Brian Armstrong in January was pretty like outspoken about like no, we're not going to support the Clarity Act in its in its uh current form because the banking lobby has you know co-opted it in in some way. you know, they they've made sure that their interests were were kept uh protected.

[00:02:30]Um I like from the outside looking in as a layman, uh I fundamentally believe that you should actually just be able to hold stable coins in a a savings account and earn yield on it. But the banks in the US don't want that to happen. Why?

[00:02:46]Well, Brian Armstrong, our CEO, has been clear from the very beginning. Um it's critically important that we protect rewards and protect stable coins because they do offer such potential for radical change in our financial system. Now um the banks have worked very hard in particular their trade associations have worked very hard to undermine the adoption of rewards and to rely upon the claim that somehow by paying rewards um to stable coin holders somehow uh their their their balances are at risk. They refer to this sometimes as the deposit flight risk. There's zero evidence of this. I can't underscore enough that when pushed the banks in meeting after meeting and conversation after conversation, many of which I participated in personally, they produced nothing of substance to substantiate this argument.

[00:03:36]Nevertheless, uh they they have felt very strongly uh that this was a red line and so they they they negotiated quite hard. I think it's important though for the bank trades to finally take yes for an answer. Senator Tillis, Senator Ulserbrooks have heard their concerns. They've crafted a reasonable compromise which doesn't give crypto everything it wants. Doesn't give the banking trades everything that they want, but at the same time, um recognizes that, uh these two different cons, uh competing interests can be accommodated in ways that ultimately serve the American public. And so, uh I very much encourage the banking trades to, uh not snatch defeat from the jaws of victory, accept yes for the answer, and move on. Yeah, I I think compromise is the the best word, but I I still it it still puzzles me that we've we've built fantastic infrastructure that has solved a lot of pain points that Tradfi should really recognize. But I guess it's it's the the fear that something new is going to replace something old. I think that's right, Gareth. But I think it's also important to recognize that the most forwardlooking, forward-leaning among banks and other traditional financial institutions are themselves adopting this technology or indeed uh looking to adopt it in short order. It's one of the reasons why um I think it is very much in the banks and their trade associations interests uh not that they need advice from me um to accept this compromise and move on because of course if they do not they will have no standing to to compete in this marketplace and um genius in its full scope will remain the law of the land and of course under Genius uh any reward can be offered uh by any non-issuer for any purpose and I I don't think that's what the banks want. At least that's what they claim. you've been around for a long time in this industry and I mean we've we've all seen a huge amount of change. uh we were talking all air about all these old institutions and I I remember you know 3 years ago being at the World Economic Forum sitting in in in a panel with uh Brian Armstrong on stage alongside people like Leha Kanyako was the South African Reserve Bank Governor and I was the person that posed the question to them being like you know what's going to happen with the Bitcoin reserve do you do you foresee this happening and Brian gave such an eloquent uh answer on you know on stage at W uh in a in a place where they've just avoided talking about Bitcoin for a very long time. And then South Africa's Reserve Bank Governor gave an answer that suggested that he didn't quite understand what Bitcoin is and how it works. Fast forward to 2026, the same thing happened again this year where Brian Armstrong was on stage and he spoke very eloquently about Bitcoin and then France's central bank governor really made himself uh also look like he didn't really know much about Bitcoin.

[00:06:15]How long does it take until these people at the top of, you know, the financial system really recognize Bitcoin for what it is? Do you do you think it's going to happen?

[00:06:24]>> I recognize it can be frustrating for many in the crypto community to hear um uh incomplete descriptions of Bitcoin and other uh crypto cryp cryptocurrencies um and the technologies that underly them. I understand it can be uh amusing in some cases to hear them display a certain ignorance about how these technologies uh and asset classes can solve real problems for real people.

[00:06:47]But I also think it's important for the crypto community to recognize that this conversation is taking place at all. I mean it wasn't that long ago that you would never heard the word Bitcoin uttered at a at a meeting of the World Economic Forum or among central bankers from all over the world. So the fact of the conversation taking place I think is uh somewhat remarkable but even more remarkable than that is that we're seeing now in all sorts of uh institutions all over the world that previously had very little appetite for crypto real engagement with how this technology can solve problems that their economic systems currently face. And I and I think it's wonderful to see that uh that nowhere is that more true than here in the United States where we have a chairman of the SEC in Paul Atkins, a chairman at the CFTC in Mike Celig who not only get what this technology is about but are indeed champions themselves of using it to modernize an American financial system that has long lagged behind its full potential. So, um I actually choose to view this situation as encouraging and optimistic even though I recognize that um in certain moments it can feel like we're still um having old debates uh around old old fears.

[00:07:57]>> No. Well, I mean I I echo your sentiments and when I was there in uh 2024 and I got the opportunity to put my hand up, that's why I did because I don't think anyone had spoken about Bitcoin inside W ever. So, it was it was great to finally like like light the spark that that got that going. Kudos to you for finally raising an issue that I've ignored for many years.

[00:08:16]>> I mean, my my heart was in my throat cuz I thought someone might take the microphone away from me as soon as I mentioned Bitcoin, but that didn't happen. Um, I wanted to talk to you just about the US landscape. Obviously, so much has changed between uh you know, two different governments running the country and uh it's been a very uh promising and and flourishing two years for our industry. Um, at the same time, there's been a lot of question marks around, you know, the Trump's influence and, uh, I guess, um, misaligned incentives and perhaps some people taking advantage of of their political position. Does that concern you at all that that these things kind of happen and and some of the allegations that get thrown around by politicians uh, playing around in the crypto space? Well, I understand uh the concerns that give rise to at least certain allegations that have been made, but I think it's also important to recognize that um to the extent there are concerns about misuse or abuse of uh this particular technology and asset class, it's no different than misuse and abuse of all sorts of other asset classes that have been taking place uh for really time in since time in memorial. Um, I think it's critically important that cryptocurrency be given a fair chance to compete on on the global stage. Not not not not an advantaged um chance, not a disadvantaged chance, but simply a fair and equal uh and balanced chance to show that it can solve real problems in ways that have never been solved before. I think that the more sensible among those in Washington, and I recognize that sensibility among Washingtonians is not always recognized by the wider American public, um will ultimately prevail. Um, and I I do think that um if if policy makers and regulators alike continue to focus on what will keep America strong, what will allow it to continue to compete globally against a rising power in China, what will allow the American people to continue to flourish, they're going to get to the right answer on almost every question regarding crypto and Bitcoin uh that they confront.

[00:10:13]>> Um, let's talk about prediction markets cuz it's been it's been so so interesting. Uh, a few weeks back I chatted to Benjiao who's the the CEO of Bybit and and he was like I would love to be in that business but I don't have u I don't you know I just don't have the the ability to do it. I don't have the clearances. I I would need to go and get loads of licenses in different places in the world to to start playing in in poly markets you know uh um field as as it were. Can you explain a little bit the landscape of these markets in the US?

[00:10:41]what the difficulty is in offering these products or services in different states and and where you see this going because it's clear like poly market is so big now. It's it's definite I didn't see it going this way but it's it's undeniably big and it seems like it's going to take over conventional gambling markets and that kind of stuff. Well, the US uh landscape is quite complex and it's complex for a number of reasons. Uh perhaps the most important reason is that Congress uh made it very clear that to the extent that event contracts involving uh any number of topics, weather, politics, sports, whatever that are listed on CFTC uh uh registered exchanges are the exclusive purview are subject to the exclusive jurisdiction of the CFTC. Now uh certain state governments at the same time uh have taken uh what we believe to be a misguided view that somehow their traditional authority to regulate gaming somehow uh trumps that uh that explicit mandate from Congress. Unfortunately, conversation and discussion alone hasn't been enough to resolve this question.

[00:11:46]And so you have seen now lawsuit after lawsuit filed in state and federal courts all across the United States on this question of who has the right to regulate this particular uh new form of of of of asset class. But I think that um it's important for everyone to understand that um it's often the case that courts are required to step in when there are these debates about federal versus state jurisdiction. I'm ultimately an optimist that the courts are going to get to the right result.

[00:12:14]We've seen court decisions uh go in many different directions, but the bottom line is that when Congress is explicit that a particular type of um asset in this case swaps is so broad as to sweep in a particular type of uh uh offering which in this case are event contracts uh that is the law of the land and in this case that means that these event contracts must be regulated by the CFTC and CFTC alone. What why do you think prediction markets are important? What what are they what are they doing that conventional gambling wasn't doing?

[00:12:49]>> Well, I I I think what prediction markets offer is a unique insight and signal into popular seg sentiment that has never been possible before. You know, if you think back to where I think um prediction market truly had the breakout moment, which was the November 2024 presidential election here in the states, um poll after poll after poll predicted that the Democratic nominee, uh Vice President Harris would win. And of course, we now know that was not accurate. And um in fact, really the only market signal which identified uh Donald Trump as the likely winner of the election was the prediction markets which which addressed that topic. So I think the proof was in that pudding and that got people quite excited about the ability of prediction markets to do all sorts of things and provide insights on all sorts of topics that go far beyond just one presidential election in one particular year. Now I think that prediction markets also offer advantages above and beyond uh uh uh traditional gaming even when they concern subject matter which may overlap for example sporting events. Um the fact is that with prediction markets on CFTC registered exchanges you have peer-to-peer trading. you don't have a bet being laid against a casino or sports book where the house has an advantage in almost every case and you also have just a better customer experience, a better UX, a better product overall that um obviously a lot of Americans are quite excited about. So I think you know the market's going to have a lot of say in the end as to how all of these um regulatory issues get resolved because of course um I don't think any wise policy maker can ignore the the wishes of tens of millions of of people all across the US who are who are racing into these um particular uh products. Uh but I think it's going to take a while for the courts to sort all that out and uh it may even take the Supreme Court to issue the final word.

[00:14:40]Um my final question to you just in terms of Coinbase's future. Um it's it's undeniable that what what Coinbase has built has fundamentally influenced the entire cryptocurrency ecosystem and it will continue to do so. you yourself, you know, I said to you off your air, I think you've been a fantastic champion for the industry in general, but um I've asked many different cryptocurrency exchange CEOs, do they see these platforms being the banks of the future, the stock exchanges of the future, uh the prediction markets of the future?

[00:15:13]Like if we're all building everything apps, who wins that race? And why do you think it might be Coinbase?

[00:15:18]>> Well, I I definitely think it will be Coinbase, not surprisingly. And we are certainly uh focused entirely on building an everything app and everything exchange um that meets our customers where they live and that offers a better experience than anything else out in the marketplace. I think part of the reason why this vision of the future is the correct one is that um over time Gareth we're seeing that um consumers, investors and others no longer distinguish between these different types of products and services or markets in the ways that uh they might have just a a short time ago. Uh the fact of the matter is that trading in prediction markets uh for many um is simply an alternative to trading in crypto which itself is an alternative to trading in equities and bonds and all sorts of other financial instruments.

[00:16:05]And so if that's where uh the consuming and investing public uh is, then it's critically important that the companies and and others who are racing to meet the demands of that public uh uh provide them with products and services that they expect. And that's what we absolutely are focused on doing. My my last last question to you, the the Clarity Act, when do we actually see this going through?

[00:16:26]>> I'm very confident we're going to see the Clarity Act passed uh this summer at the latest.

[00:16:30]>> Can I hold you to it? No.

[00:16:32]>> Well, maybe we can get back together and we can see if I was right or wrong, but I think I'm right.

[00:16:35]>> Well, uh maybe there's a prediction market for it. I'm sure there is. Paul, thank you so much for your >> pleasure. Thank you.