Paul Grewal (Coinbase): "The environment is becoming much more favourable in the US".

For the past few months, the US stock market watchdog (SEC) has been waging a major offensive against crypto players. Coinbase has not been spared. How is the company doing?

Honestly, things are going rather well. Like many companies, we are the target of SEC investigations, but things are moving quickly and in the right direction. Unbelievable as it may seem, it feels like the tide has turned in favour of the crypto industry in the US.

How is that possible? What makes you say that?

There are actually several reasons. The first is obviously the recent court rulings, and in particular the one in favour of Ripple in its case against the SEC.

This ruling is very important because it provides a clear answer to a fundamental question: are tokens like XRP financial securities? In its ruling in July, the court definitively explained that XRP was not a financial security, which completely changes the situation.

The ruling in favour of Ripple is all the more important because the US legal system does not work in the same way as in Europe. In the US, a judge's ruling has the force of law. The SEC, which has regulatory powers, must therefore abide by the judge's decision.

The second reason why I am optimistic is that many US elected representatives have taken action in recent weeks. They have made several legislative proposals to define what a crypto market is, and how crypto products should be issued and regulated, and this is the first time we have seen this.

The aim is to provide a framework for the launch of tokens, to clearly define what they are from the outset. Some may be conventional financial securities, but most are decentralised project tokens, and the companies issuing them need to be sure that they will be considered as commodities and not as financial securities, and above all that this will not change.

The US Congress is also in the process of moving forward on regulation for stablecoins, which is very important for this ecosystem.

How do you explain this change in attitude among US elected representatives?

Many had not understood the interest of this industry and what it represents in terms of jobs and sovereignty. A few days ago, I was with our CEO Brian Armstrong and several American elected representatives, and I can tell you that attitudes have changed.

The most impressive thing is to see that this affects all American elected representatives, both Democrats and Republicans. It's very important to see this bi-partisan awareness.

For years, the US hasn't been moving fast enough on cryptos, and now I'd say this is the first time I've seen a consensus. Europe is leading the way, the rest of the world is following, and I think the US has realised that it's not a good thing to be lagging behind.

The SEC has not, however, given up on the idea of pursuing crypto projects. Its chairman, Gary Gensler, recently reiterated that he would continue his investigations and they have appealed in the Ripple case...

The SEC has in fact not given up on anything, and Gary Gensler wants to exercise his authority on these subjects, but the justice system and US elected representatives are now on our side.

What the SEC is doing on the fight against fraud is very important, and we support them, but right now it's not about that. This is about ensuring the development of an industry that is crucial to the future of this country.

Coinbase, like other players, has decided to relist XRP and other tokens on its platform. Isn't this a risk?

It wasn't an easy decision, but as soon as the court ruled in favour of Ripple, we analysed everything and very quickly found that we could relist XRP because the judge's decision is very clear: XRP and the other tokens are not financial securities.

We know that we're not taking any risks. It's important for us to serve investors, especially those who want to be able to buy and sell XRP or other tokens.

The decision on the case between Ripple and the SEC is just a first step. Things could evolve in the coming months with the appeal...

Of course, but honestly, the first instance decision is pretty clear and the judge in question is someone who is highly respected. She took her time with this decision, so even on appeal, we're convinced that things won't change fundamentally.

In another matter, you've suspended your staking service in several US states. Where do you stand on this issue?

The SEC, as well as regulators in several states, have also attacked us on the subject of staking (which involves immobilising your cryptos in protocols to participate in their security while receiving remuneration in exchange, editor's note). What you need to bear in mind, however, is that in the United States, when you are attacked over the legality of a financial product, you have to stop it being put into circulation for new customers. It's a precautionary measure, and that's why we've suspended staking in several states. Coinbase has always complied with the law.

Now we're in the legal phase where we're going to prove that staking is not an activity based on financial securities.

So you haven't suspended staking nationwide?

This only affects 5 states, and only new customers. Those who already had staking products with us are not affected.

Hasn't all this regulatory turmoil had a negative impact on the US ecosystem? Many companies have frozen their activities and, for some, even reduced their workforce...

Coinbase was created in the United States; 80% of our business is based here, and we are convinced that the United States can play an essential role in Web3. For us, things are clear, the Web3 industry has a bright future, especially in the world's leading economy.

Once that's been said, I think the SEC has indeed done a lot of damage to this industry. Uncertainty is a very bad thing, and there's never been so much of it here, so it's not easy for companies to innovate, hire and plan ahead, especially in a Bear Market environment.

When I compare that to what I see in France, in the UK, I can see that it's not a good thing.

You talk a lot about Europe, but a few months ago, Brian Armstrong explained in an open letter that the "big winner" of the United States' setback in Web3 would be China. Why China and not Europe?

Let's be clear, Coinbase has no business in China, and almost 20% of our business is in Europe. Europe is clearly our second largest market, so we're very optimistic about Europe. MiCA is an excellent step forward for Europe. We're following it closely in the United States, and that's why we're betting so much on it. We have offices in Ireland, the UK and Germany, and we're about to get our registration as a digital asset service provider (DASP) in France.

On the subject of  China, what Brian Armstrong meant was that after being openly opposed to cryptos, not least because of what they enable, China has changed its view, and is now very supportive of the sector. Look at what's happening with Hong Kong. Regulation has changed a great deal. Beijing is even encouraging Web3 companies to set up there.

What are the next steps for Coinbase?

We really want to continue to develop internationally, specifically in Europe. A lot is going to happen in Europe over the next 18 months. There are going to be a lot of opportunities for Coinbase and the rest of the ecosystem. There's a great ecosystem in Europe, and specifically in France.