Brian Armstrong, the CEO of cryptocurrency exchange Coinbase, has expressed his belief that his company made the right decision to comply with U.S. money transmitter licensing laws. In a recent social media post, Armstrong commented on the news that rival exchange Binance is pleading guilty to criminal charges, stating that he is glad that Coinbase decided to obtain money transmitter licenses, despite the competitive disadvantage it may have caused.
Armstrong emphasized that since the founding of Coinbase in 2012, the company has taken a long-term view and recognized the need to embrace compliance to become a generational company that stood the test of time. He emphasized that Coinbase got the licenses, hired compliance and legal teams, and made it clear that their brand was about trust and following the rules. Armstrong acknowledged that the compliance strategy slowed the growth of the company, making it difficult to move as quickly as others, and it was more expensive to take a compliant approach. However, he believed that this approach was necessary because they believed in the rule of law.
One of the key points that Armstrong brought up was the lack of regulatory clarity in the U.S., which results in pushing users to offshore exchanges like Binance. He firmly stated that Americans should not have to go to offshore unregulated exchanges to benefit from cryptocurrency technology. However, he expressed optimism that the resolution of the U.S. criminal case against Binance may be the catalyst for more regulatory clarity.
Armstrong has been vocal about the lack of regulatory clarity in the U.S., citing the fact that it has driven “95%” of crypto transactions offshore. He also noted that the Securities and Exchange Commission has filed suit against Coinbase for allegedly violating U.S. securities laws, though these claims are not related to violations of the Bank Secrecy Act or money transmitter licensing issues.
The Department of Justice announced that Binance has agreed to plead guilty to violations of the U.S. Bank Secrecy Act and for serving U.S. customers without obtaining the proper money transmitter licenses. This move by Binance highlights the importance of adhering to U.S. laws and regulations in the crypto space, and has drawn attention to the need for exchanges to prioritize compliance.
In the midst of ongoing regulatory challenges, Armstrong’s unwavering commitment to compliance has positioned Coinbase as a trusted and established player in the cryptocurrency industry. Despite the competitive disadvantage, Armstrong is confident that the decision to adhere to U.S. money transmitter licensing laws was the right one for Coinbase in the long run.
Coinbase’s compliance-first approach has set a precedent for other exchanges and companies operating in the cryptocurrency space. By prioritizing regulatory adherence and embracing compliance, they have not only laid the foundation for long-term success, but have also played a pivotal role in driving conversations around the need for clearer regulations in the industry.
As the cryptocurrency landscape continues to evolve, it is becoming increasingly clear that compliance and regulatory adherence will be fundamental to the long-term success and sustainability of exchanges and companies operating in this space. The example set by Coinbase serves as a reminder that prioritizing compliance, despite the associated challenges, is crucial for building trust, ensuring longevity, and contributing to the further legitimization of the cryptocurrency industry.