With so many people bloviating about AI these days, crypto seems to have taken a back seat. Tulip Siddiq, the UK economic secretary, gave a 15-minute speech at the recent Innovate Finance fintech conference, eulogising fintech and its importance to the UK economy.
Siddiq gave a lot of love to AI but didn’t mention crypto once, despite the conference featuring a crypto panel. On the panel was Tom Duff Gordon, a policy head for Coinbase, the US’s biggest crypto exchange, who would unlikely be fazed by this snub.
Labour pro-crypto
Labour is “moving in a direction we would support” on crypto, says Duff Gordon, who joined Coinbase in 2022. He cites three indicators for his positive outlook: the government speaking “positively” about tokenization; a UK bill recognising digital assets as personal property; and the government considering launching a digital gilt.
Duff Gordon said:
“I think altogether, being pro-growth, being pro-investment, and saying positive things on property rights for digital assets and tokenization suggest to us that this is moving in a direction that we would support.”
This interview took place before the UK Budget, and businesses might take issue with the government being “pro-growth”.
Duff Gordon is Coinbase’s vice president of international policy, a key role in which he drives Coinbase’s engagement with policymakers in markets outside of the US, at a time when crypto regulation is still in the air or very new in many markets.
Safe pair of hands
It is a role that is likely to require a soft touch, calm temperament, and bulletproof communication skills (Duff Gordon is unlikely to drop a clanger), all of which, in this 30-minute interview window, the Coinbase executive displays.
Furthermore, appearances matter at policy tables, and Duff Gordon doesn’t look like a crypto bro, more Home Counties bro: a sober suit and shirt man, rather than trucker cap and bitcoin merch. He held a similar policy role at his former employer Credit Suisse, engaging with global policymakers as new rules were hammered out following the 2008 financial crash.
This is probably why Coinbase came knocking, as it looked to sanitise the crypto brand with a safe pair of hands.
On his move from TradFi to DeFi, he said:
“It became clearer and clearer to me that the future of policy for financial services was policy going to be related to the green transition but also digital finance as we saw more and more fintechs innovating in this space.
“And then we saw crypto and digital assets emerge on the scene.”
But it must have been a difficult decision to leave the cosy and safe world of TradFi? Yes, he says, but he says it’s good not to be in same job forever, having done 15 years at Credit Suisse.
Coinbase story
Coinbase has one of those typical Silicon Valley ugly duckling-to-swan folkloric backstories. It was launched in 2012 by Brian Armstrong, current CEO and Fred Ehrsam (who met on Reddit) out of an unprepossessing two-bedroomed apartment (shared with another company), with a Himalayan ambition of making buying and selling cryptocurrencies as simple as online banking.
With a carpe diem attitude, Coinbase has flourished into a 100m-plus user base, generating nearly $3bn in annual revenues with a market cap of $45bn; Marc Andreessen sits on its board, and Armstrong is widely seen as the most powerful crypto bro in Washington.
Furthermore, Coinbase’s blossoming occurred during a period in which the crypto industry suffered some well-documented horror headlines. Coinbase, which is Nasdaq-listed, has expanded its offering beyond its core crypto trading to institutional investing, subscriptions and a Visa debit card.
Man of travel
Gustave Flaubert, who Duff Gordon read at university, said: "Travel makes one modest; one sees what a tiny place one occupies in the world.”
Duff Gordon, based in the UK who has two young children, has done his fair share of travelling with Coinbase, visiting up to 20 countries already this year. Latin America and Australasia are next up.
While arguably not as aphoristic as Flaubert, Duff Gordon’s observation about travel will undoubtedly resonate with many young families.
He says:
"You learn there is a big difference between travelling through an airport by yourself for work versus with children."
One of the places he has racked up the miles is the EU, where last year the world’s first comprehensive rules for the crypto market, called MiCA, were approved, a ground-breaking move across national borders which have been hard to police.
New EU rules
The EU-wide rules introduced requirements on crypto platforms such as on licensing, transactions and transparency while also bringing customer protection to the fore.
Duff Gordon says the EU rules create "stability” which is at odds with the US, where Coinbase is facing a sword of Damocles legal battle with the Securities and Exchange Commission over securities laws that could determine not just the crypto trading platform’s future but that of the wider industry.
There is little doubt that the EU is a key growth market for Coinbase, considering its regulatory pressures in the US. Duff Gordon says it is an “astonishing thing” that the EU is far ahead of the US on digital asset regulation, pointing to crypto jobs and crypto investment shifting out of the US.
Ireland EU hub
Coinbase’s EU hub is in Ireland, meaning it can passport its products across the 22 EU nations. Duff Gordon admits that “knowing where regulations are in Europe is helpful” when deciding whether to try out new products in the US or the EU.
He says:
“The EU is exceptionally good at promulgating regulations but not always the best at taking advantage of those and being leaders for innovation particularly in the tech space.
“We’re hopeful that this time, with MiCA as a world-leading regulatory framework, that we will actually be able to capitalise on that, to attract the investment. And they can really build a thriving digital asset ecosystem in the EU.”
He is keen for the EU to see how digital assets can work with AI, which is a strategic tech for EU, and can help solve “intractable problems” in the bloc, such as the Capital Markets Union, an EU initiative to create a single market for capital across EU member states.
Web3 chance for Europe
There is a feeling that EU rulemakers are keen for Web3 to be synonymous with European tech firms, unlike Web2, which was US-dominated.
Duff Gordon says:
“I think there is a hope that the UK and the EU will become more competitive with technology.
"I think what we’re most hopeful for is there can be new types of business model that are built on this new version of the internet.
“A lot of the governments I talk to, I think they all see the opportunity here.
“There is a lot of private equity, and venture capital investment going in and it will be very interesting to see which jurisdiction capitalises on this new era, this new wave of innovation for Web3.”
Crypto’s reputation problem
But crypto, for many, is still dirty work, who see it as a byword for scams and fraud. Billions of dollars of cryptocurrencies were illicitly traded in 2023, with its most famous scammer being Sam Bankman-Fried, previously crypto’s very own Sun King.
On crypto’s reputation challenge, Duff Gordon says:
“I think we have to be humble. There are reputational problems. But I would say with any new technology, there always tends to be speculation.
“When you look at the statistics, less than one per cent of all crypto transactions are illicit, the numbers for cash are three or four times higher than that. But I think we have to be humble, we have to try and address some of these things.”
Recent crypto wins
That said, crypto has had some recent wins, which could be further bumped by Trump, a crypto fan, winning the US election.
These include major institutions like BlackRock and Fidelity moving into the market while last month Stripe shelled out $1.1bn to snap up US startup Bridge, which specialises in shifting money using stablecoins (some consider stablecoins, in a good way, to be the gateway drug for broader crypto adoption).
Crypto and AI together
There are, Duff Gordon posits, lots of reasons that AI and blockchain should be part of the same conversation and are “synergistic”.
He says:
“I think that AI scales content and blockchain scales trust. If we want to get most out of the AI revolution, we need to be able to trust what the AI is doing.
“Blockchains working with AI are going to be an incredibly powerful combination to make us understand the provenance and be able to validate the authenticity of data that AI is beginning to use and data that comes out of large language models.”
Additionally, he says that AI and crypto working together can give rise to the the Agentic web, whereby AI agents leverage blockchain tech to spur economic activity while blockchains and tokenization will also be used to record purchasing and transactions as AI become more widespread.
Media savvy
One of the challenges of interviewing media and panel-experienced executives like Duff Gordon is that they don’t slip up. If one was to be picky, he can lay on it a bit thick at times, describing the “extraordinary calibre” of Coinbase colleagues while Armstrong, whose recent wedding he didn't go to ( "I found out on Twitter") is called a “visionary leader”.
That said, Duff Gordon, who enjoys his football, appears to be a good signing for Coinbase. He knows his brief, is not prone to hyperbole, and has some sensible ideas about how Coinbase can grow outside of the US and how crypto can detoxify itself and become more mainsteam.
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