Fintech

States aren’t waiting for the federal government to regulate crypto

While the U.S. waits for a federal framework on crypto regulation, states are taking charge, Coinbase’s head of State and Local Public Policy David London says.

David London, Coinbase's head of State & Local Public Policy

"I think it's good that states are taking charge."

Photo: Coinbase

President Biden’s executive order on crypto punted the issue to agencies for further study. The SEC and CFTC are battling over regulatory turf. David London, Coinbase’s head of State and Local Public Policy, thinks that states aren’t going to wait for a federal framework.

Several states and cities have already put some kind of crypto regulation in place, and others are planning to. There’s New York’s expensive, restrictive BitLicense, Wyoming’s crypto-friendly laws and Miami’s proposal to pay city workers in bitcoin.

London elaborated on his experience working through multiple eras of the web to eventually land at Coinbase, the shape of the local regulatory landscape for crypto and what Biden’s executive order could mean for state legislation in an interview with Protocol.

This interview has been edited for brevity and clarity.

Can you talk a little bit about your prior experience before joining Coinbase, and why you chose to go into policy within tech companies?

I started in public policy in tech in the early 2000s. So literally, I've seen Web 1.0, to 2.0, to 3. I started my career at Cisco Systems and what motivated me getting into tech policy is when during the dot-com era everything was really hot in Silicon Valley. I was working in Maryland for a legislator, and I told him, “Boss, I love you. But I'm moving out to Silicon Valley.”

After that, I headed over to eBay and PayPal, and eventually managed all of eBay's and PayPal's state and local programs across the country. From there, I joined a couple more 2.0 companies, specifically a startup called Ofo, which was in the dockless bike-share space, after I left eBay. Most recently, I was at DoorDash where I headed up U.S. East and Canada, and also started its federal program as well.

So I've always been interested in fast-growing companies and companies that were sort of cutting edge, which brings me to my current position with Coinbase. So going from 1.0 to 3, this was like the best match for me moving forward. And I think the things that we're doing, and working with policymakers, I think it's going to be really life-changing, not just here in the U.S. but across the world.

What made you jump into the crypto industry from DoorDash?

There's the opportunity to really do economic empowerment. When I was first researching Coinbase, in the crypto space, maybe about six or seven months ago, I was really intrigued with the opportunities that lie before this industry, specifically around economic empowerment, by allowing individuals to be more empowered for themselves and for their communities, lifting up all boats.

So if you're thinking about something as simple as remittances, if you have relatives abroad, can crypto be that sort of new phase for you to get money to your relatives? Similarly, here, getting access to credit, getting access to capital, for some of the communities in the United States, I see crypto as also being one of those potential avenues for them as well.

It’s a lot of green space, which was really cool with DoorDash, we were doing some really cool stuff trying to educate policymakers. But after [California’s Prop. 22 was] out there, people's minds were kind of already made up about the industry. What I love here, people are so open-minded at this point, a lot of policymakers want to figure out what it is. What is this crypto thing? What is this blockchain thing? They're coming to us to educate them and trade ideas, so that's what's really exciting about this, is there's so much green space to work with policymakers across the country.

With DoorDash and the gig economy, labor is more regulated on the state and local levels. With crypto so far, federal legislation has taken the spotlight. What are your thoughts on the importance of state legislation within the crypto space right now?

I mean, we would love to have a solid federal framework that harmonizes, that's consistent and that makes sense for the industry moving forward.

But in lieu of that, what we have seen is that states are just going to do their own thing, and not just states, but also localities. We're literally tracking legislation all across the country, and seeing that states are putting policy proposals forward, in lieu of federal action.

So I think it's good that states are taking charge. What I really like and what I've seen from a lot of states is that they're really doing it in a very methodical way. That they're looking at the industry, they're looking at: How can crypto benefit their communities? What are some of the safeguards that they need to put up for their constituents? What are some of the things that the industry is looking for? And can industry be a partner with them?

So I think what I've liked, in my short time here, is that I've seen policymakers proactively come to us and ask me, “Hey, what is crypto? How do we get behind this? How do we protect our consumers? How do we make sure that the individuals that use it are successful?”

New York has its coveted BitLicense, and certain states are friendlier than others towards crypto. How do you think that affects the crypto industry and how Coinbase operates?

We're regulated, and we have money transmitter licenses in over 40 states in the United States. So we move forward to the states that we operate in, which is most of the states based upon that. And we're able to understand what the laws are, we work with our regulatory team in getting a good sense of sort of what is the regulatory landscape in an individual state, and we engage at that point. We have very close relationships with regulators in the states that we operate in.

Now, obviously, having multiple states with different licenses, one size doesn't fit all for every state, but one of the things that we have seen is most of them are pretty consistent, generally speaking. What we really love is that the regulators are really good to work with and we have good opportunities to engage with them.

Do you have any thoughts on Biden's executive order and how that might impact state legislation with a more federal framework down the line?

I think the executive order is, as we always have to remember, it's the first step in a much larger process. We applaud the administration for leaning into the issue and, and wanting to bring in industry and to go through the process and see what makes sense from a federal perspective on regulation of our industry.

But in lieu of that, as I mentioned before, the states aren't waiting. It wouldn't surprise me if you start seeing more states introduce things themselves to lean more into crypto in the coming months and years. So I think that's really positive.

There’s also tons of smaller cities that are looking to get into the crypto space. And so I think these are like incubators of innovation across the country.

Also, it's not like a red issue or a blue issue. A lot of times in our industry, people line up on one side of the aisle or the other side of the aisle. What I really love about this industry is it's really bipartisan; we have folks on both sides of the aisle, whether they be far to the left or far to the right, and tons in the middle, that like crypto and want to understand what it is and the benefits of it for their community.

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