Proof of State is the Wednesday edition of Coins2Day Crypto where Leo Schwartz delivers insider insights on policy and regulation.
Coinbase has always been a political organization, with cofounder and CEO Brian Armstrong long pronouncing his vision of “democratizing finance” through cryptocurrency. That approach has come with its downsides, including a failed foray into global philanthropy and Armstrong’s declaration that Coinbase was a “mission-focused” company in a lengthy blog post in 2021, which read as an anti-woke stance.
After FTX collapsed and Sam Bankman-Fried stopped wandering the halls of Capitol Hill, Coinbase seemed to finally feel comfortable in its role as an advocacy organization, spearheading donation efforts and elevating its lobbying arm, not just in D.C. But across the country. In August, Coinbase introduced the Stand With Crypto Alliance, a 501(c)(4) “social welfare” nonprofit tasked with “unleashing” the power of the 50 million Americans who hold a digital asset.
As I wrote about last week, I am skeptical, to say the least, of the existence of a crypto voter: someone who doesn’t work in the industry yet will be swayed to come to the polls because of the perceived injustice wrought by regulators.
In its six-odd months of operation, Stand With Crypto has gotten results, with its trademark shield omnipresent in profile names across Crypto Twitter. The organization claims a successful digital campaign with more than 310,000 “advocates” and $86 million in donations, although you have to hover over the number on its homepage to see the fine print: That figure includes the super PAC Fairshake, which has received over $85 million in funding from prominent crypto figures like Armstrong.
Coinbase’s efforts are not just in Twitter degen circles and clubby fundraising circles, however. Stand With Crypto has been flying entrepreneurs to D.C. To meet with the offices of prominent lawmakers like Elizabeth Warren (D-Mass.) And hosting town halls in places like Ohio and New York to bring together community members (again, mostly crypto entrepreneurs) and local lawmakers to talk policy. It even hosted a presidential debate in New Hampshire in December, although it was only attended by third-tier candidates like Vivek Ramaswamy and Dean Phillips.
I headed to Boston last week to attend one of the town halls. Stand With Crypto hosted the event at the University of Massachusetts Club, a swanky venue on the 32nd floor of a skyscraper overlooking the city’s trademark Citgo sign. About 100 people gathered—a good showing of Coinbase employees, including head of policy Kara Calvert, as well as local blockchain founders and organizations like the Boston DAO, which sports a Dunkin’-themed logo. There was even one attendee who seemed to fit my parameters of the mythical crypto voter—although he sadly declined to be interviewed; the search continues.
One of the panels included a state legislator, a Democrat named Kate Lipper-Garabedian, whom I caught up with afterward. She is interested in blockchain as a way to modernize bureaucratic nuisances like deeds and student records, introducing a number of bills, including one that would direct the state treasurer to put together an online financial literacy module for investing in digital assets. She gave a refreshing perspective that she doesn’t even follow the morass around the security versus commodity debate, understanding that it’s beyond her purview. When I asked whether she was disappointed that Warren has taken such a firmly anti-crypto stance, she gave the type of polite nonanswer that made me think we’ll see her on the national stage soon. Warren challenger John Deaton, sadly, did not make an appearance.
It’s easy to get caught up in the federal roadblock, but Coinbase’s strategy to focus on the local level makes sense. There is legislative progress actually happening on the state level, after all, from New York to California to Illinois, and maybe even in Warren’s home state of Massachusetts. “The states aren’t going to just sit around and not compete,” Calvert told me.
Whether Coinbase’s strategy bears fruit on the state or federal level is still an open question. The road show, however, continues. Next up is California, where Stand With Crypto is hosting a Get Out the Vote event in Los Angeles with Armstrong and the rapper Nas. I guess the bull market really is back.
Leo Schwartz
[email protected]
@leomschwartz
DECENTRALIZED NEWS
Convicted FTX founder Sam Bankman-Fried filed his sentencing memorandum, asking for fewer than 6.5 years, compared with a potential sentence of over 100 years. (Coins2Day)
Kraken launched its own institutional custody service to challenge Coinbase as demand increases after the launch of Bitcoin ETFs and rising prices. (The Block)
The Internal Revenue Service pulled off a reverse revolving door as it hired two former digital asset executives from Binance.US to beef up its crypto efforts. (Bloomberg)
The Bitcoin mining firm Riot Platforms is suing over a Department of Energy emergency survey into energy use, but lawyers argue the request was warranted. (Coins2Day)
MicroStrategy is riding the wave of crypto prices’ recent explosion as the publicly traded company’s Bitcoin holdings hit $11 billion. (CNBC)
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