Seeking to define next gen finance @Coinbase | ex-SEC, former academic, once upon a time engineer.
Austin, TX
Joined February 2017
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As someone who was denied banking services and put in endless EDD loops it is great to see the admission of one of the most unamerican regulatory practices of this generation.
bombshell report from the OCC out today confirming what we all suspected:
between 2020 and 2025, based on a review of 100,000 complaints, America’s largest banks systematically denied banking to lawful businesses based on political and reputational considerations rather than objective financial risk, effectively appointing themselves arbiters of which industries deserved access to the financial system. digital assets was specifically named as one of the six most affected industries.
TLDR: we weren't imagining it. OCP2.0 was real.
Scott Bauguess retweeted
bombshell report from the OCC out today confirming what we all suspected:
between 2020 and 2025, based on a review of 100,000 complaints, America’s largest banks systematically denied banking to lawful businesses based on political and reputational considerations rather than objective financial risk, effectively appointing themselves arbiters of which industries deserved access to the financial system. digital assets was specifically named as one of the six most affected industries.
TLDR: we weren't imagining it. OCP2.0 was real.
Well said.
Counterpoint: The companies that embrace full on tokenization of their capital and distribution in every way possible will have the lowest cost of capital on the planet, ceteris paribus.
This is the finance 101 point that all the AML/KYC fanboys and “companies need to know exactly who their shareholders are” arguers miss. Many smart people have been telling me for years that public company CEOs will never embrace full on bearer securities. My response: “what kind of CEO demands a higher cost of capital “?
Now, obviously we don’t want shady SPVs and a million different pass through exposure products with different rights that fragment liquidity.
But that only means the securities regulators that embrace the most pure but least restricted and most bearer issuance formats will attract the most companies who in turn seek the lowest cost of capital.
We happen to live in era of surging markets and abundant capital. But that won’t last forever, and if rates keep rising it’ll end sooner than many think. When that happens, a lot of CEOs will sing a very different tune about tokenization of their equity.
We’ve already seen the sovereign debt version of this switch with stablecoins, products smart people told me for years no government will allow, “because KYC”. Now the biggest government states clearly they see bearer like fiat instruments as a path to lower cost of borrow.
The same argument will come for privately issued securities in the form of equity and debt.
Cost of capital is the final arbiter of which infrastructure and which product wins.
This week, @coinbase filed our response to the @CFTC's RFC on extending 24/7 trading and perpetuals to energy futures.
We've already brought 24/7 trading to crypto and, more recently, gold and silver futures, all under CFTC regulation. Our experience shows weekend trading works well under the right controls, and energy is the natural next step.
Independent economic analysis we submitted shows projected weekend energy volume sits well within the range of contracts already considered liquid during weekdays, and weekend volatility runs below weekday levels.
Closing markets on weekends means postponing price discovery. Closed markets are more volatile when they open, rushing to incorporate weekend information. Continuous trading is the better path. Full response: regulations.gov/comment/CFTC…
Yep. Protecting bank incumbency versus leading globally. Lawmakers need to make the right choice for the U.S. to define the next generation financial system.
For those who misunderstand what’s at stake in the debate on offering rewards on US-issued stablecoins under the GENIUS Act, a sobering and timely announcement from the People’s Bank of China that they plan to pay interest on the Digital Yuan. 🇨🇳🇨🇳
Tokenization is the future and the GENIUS Act was a visionary move by @POTUS and Congress to ensure US dollar stablecoins issued under US rules would be the primary settlement instrument of the future.🇺🇸🇺🇸
If this issue is mishandled in Senate negotiations on the market structure bill it could hand our global rivals a big assist in giving non-US stablecoins and CBDCs a critical competitive advantage at the worst possible time. Lobbyists for entrenched incumbents will always fight change. It's critical for negotiators to protect the primacy of the US dollar and the US financial system, not just incumbent interests.
Scott Bauguess retweeted
I have an op-ed in MarketWatch making the case for why Congress should resist the bank lobby's attempt to ban third parties from paying rewards on stablecoins.
After pointing out the various false claims of the banking industry, I conclude with the following:
Congress and federal regulators should resist the call for protectionism. The banking industry is highly profitable, earning more than a quarter-trillion dollars in 2024 alone. It also enjoys unique protections like the government bailouts that have now become routine. The banking industry has all the tools it needs to either compete with stablecoins or to create new sources of revenue, including by facilitating stablecoins.
Alternatively, the government can start treating the banks like the fragile utilities they are claiming to be. Congress can consider an immediate cap on debit and credit-card swipe fees — a massive burden on most businesses, particularly small and family-owned ones. Utilities often face price caps, in part because they are monopolies. The outsize profits of the card industry indicate similar market dynamics, which is why they’ve been capped in other countries.
Congress could also pass a windfall tax on banks’ net interest margins. If bank deposits are a public good worthy of protectionism, banks shouldn’t be allowed to earn excess profits off of them.
To be clear, I would much rather banks be allowed to keep their profits while adopting the latest technology and competing with new entrants. This basic formula has led to centuries of American prosperity. There’s no reason to change it now.
No mention of crypto. Just good ol’ fashion duffle bags of cash financing the fentanyl crisis. Imagine how blockchain forensic tracing could disrupt this capital flow. wsj.com/world/china/china-fe…
Scott Bauguess retweeted
The SEC’s decentralization framework has been corrupted and used to persecute builders —incentivizing rug pulls over value creation.
It’s time to fix it.
Decentralization should mean the absence of control, not the suppression of ongoing efforts.
Here’s how and why👇
Network tokens — tokens that derive substantial value from the operation of a blockchain (eg BTC, ETH, SOL) — can have embedded trust dependencies that result in information asymmetries.
Where those trust dependencies are minimized, network tokens look like commodities with low information asymmetry risk.
Where those trust dependencies are significant, network tokens can look like securities with high information asymmetry risk — supporting the use of disclosures requirements under securities laws.
The two primary trust dependencies relating to network tokens are: (1) control and (2) ongoing efforts.
The SEC’s 2019 Decentralization Framework sought to eliminate the risk of information asymmetries by defining decentralization to mean the absence of BOTH control and ongoing efforts. Their reasoning was clear — where network tokens were “sufficiently decentralized” tokens functioned more like commodities.
But this is the wrong approach!
It’s created significant perverse incentives — builders can actually reduce their regulatory risk by abandoning their projects or by masking their ongoing efforts (“decentralization theater”).
Builders HATE this conception of decentralization.
We need to incentivize builders, not hinder them. A better two-pronged approach can achieve this:
1⃣Decentralization should be redefined as “the absence of control.” This eliminates significant risk and preserves one of the core features of blockchains – they can function without human control.
2⃣A targeted and light touch disclosure framework can be used to eliminate information asymmetries that might arise from ongoing efforts.
Collectively, this approach would foster innovation and protect users – ensuring decentralization empowers builders rather than being weaponized against them.
Full article linked below.
One of the best parts of my job is meeting with our global advisors. I’ve watched them learn our business over the past two years, through thick and thin, and am often awed by the perspectives they bring. Our latest additions have hit the ground running. bloomberg.com/news/articles/…
As an empiricist I agree with this general thesis. Some things can’t be measured well. And this is where you trust key talent to make decisions with imperfect and incomplete information.
Shopify CEO Tobi Lutke explains Goodhart’s law and why he doesn’t like KPIs or OKRs
“Goodhart’s law is real. The moment a metric becomes a goal, it’s no longer a useful metric… No metric by itself is a complete heuristic for a complex business. There’s a million different tensions in a company, and you can’t keep all of them in harmony by optimizing for one thing.”
For this reason, Shopify doesn’t use KPIs or OKRs. But as Tobi explains, this doesn’t mean they don’t value data and metrics.
“We are extremely data informed. We have invested enormous amounts of money and time into systems that give us basically everything at our fingertips… But what Shopify attempts to do is just not over-fit for what’s quantifiable.”
People love optimizing for highly-quantifiable things because there’s immediate gratification that comes from seeing a number go up. But Tobi thinks that the most important aspects of a product are rarely quantifiable:
“The overlap of the most valuable things you can do with a product and the things that happen to be fully quantifiable are like maybe 20%. Which leaves 80% of a value space unaddressable by the people who only look at quantifiable things.”
He continues:
“Shopify is comfortable with unquantifiable things like taste, quality, passion, love, hate… The sort of deep satisfaction that a craftsperson feels when they’ve done a job well is actually a better proxy if you allow it to be.”
They then have robust analytics systems that tell the company if something’s wrong or a new rollout breaks something.
“We think about it as a cockpit for a pilot. The decisions are still made by pilots, and we think this leads to better results… I think there needs to be more acceptance in business of unquantifiable things… And then metrics take a support function.”
Video source: @lennysan (2025)
Crypto debanking was real. I experiencied it both professionally and personally. It was unlawful. It was un-American. It should never happen again. linkedin.com/posts/scott-w-b…
Scott Bauguess retweeted
The 2025 World Economic Forum is kicking off in Davos, Switzerland.
Tuesday, @brian_armstrong will sit down with @nfergus and @George_Osborne to discuss how crypto can increase economic freedom for everyone.
Tune in to his talk live from #wef25: youtube.com/live/4dCH78Ya-mk
Scott Bauguess retweeted
I came to @coinbase because I saw the potential crypto holds for updating the financial system and increasing economic freedom worldwide. It's a goal that animates almost everything we do at Coinbase, and most definitely our policy work. @brian_armstrong has just published an article where he outlines his thoughts on what Coinbase’s mission of economic freedom actually means, and why we believe that crypto can advance economic freedom around the world.
The global financial system is ready for an update and that path is clear – it’s going to be onchain and permissionless. @Coinbase’s new paper explains a vision for a more responsive, effective, and resilient financial infrastructure, built on the next generation of open protocols – permissionless blockchains networks. They will facilitate greater financial inclusion for individuals around the world, particularly the unbanked. assets.ctfassets.net/o10es7w…
Atlas Shrugged should be read twice. As a young adult and mature adult. It is two different books.
Excellent read. Explains how @SECGov could have used existing authorities to promote a digital asset ecosystem even if not a complete one. @GaryGensler missed a once in a generation opportunity to have a + impact on US innovation policy. coindesk.com/opinion/2024/10…
Interesting to see one media company @TheEconomist acuse another @nytimes of reporting bias economist.com/leaders/2024/0… from
Excellent article by @ccatalini — saying what we all know and understand yet repeatedly fail to implement in our industrial policy.
