Coinbase's Paul Grewal on Crypto's Next Frontier: Regulation & Corporate Adoption

The fact of the matter is that treasuries and dollar backed treasuries in particular now reflect a greater volatility in our political system that people are looking to hedge against. Bitcoin offers one way to do that, and I think that's why you're seeing such renewed and sustained interest as an alternative.

More and more companies are adding Bitcoin and other crypto assets to their balance sheets with increased attention on the US fiscal deficit, soft treasury auctions and stubborn inflation. The conversation around crypto is no longer just about speculation. It's about a strategy that views crypto as a long-term safety asset. At the time of this taping, the Senate was debating key digital asset legislation known as the Genius Act, which was later passed. And as part of an overall governmental effort to establish a clear regulatory framework for the sector, one of the companies hoping that clarity from Congress will unlock broader digital asset adoption is Coinbase, a cryptocurrency exchange and custody platform that serves both retail and institutional clients. In its latest earnings, the company reported 1.4 billion in net income, but missed estimates sending the stock down over 16% on the day. Even with those losses, the stock remains up over 20%.

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Year to date. We sit down with Paul Gradwell, chief legal Officer at Coinbase to explore what it takes for companies to put crypto on their balance sheets, what's holding some of them back, and how stable coins are already being used by businesses to manage payments more efficiently. Let's get into it. So we have Paul Gral, chief Legal Officer at Coinbase. It almost needs no introduction. It's the leading cryptocurrency exchange and custodian platform. Paul, there's so much going on and as we speak right now, there's a whole bunch of conversation around the genius Act, which is an important part of this. Let's talk about this trend in corporations looking to hold crypto as assets on their balance sheet in a way that perhaps in the past they were holding treasuries or they were holding cash or they were holding longer dated bonds. What is the shift?

Well, I think the shift that we're seeing reflects a shift in the perception and frankly the confidence that many corporates have in crypto as a whole and Bitcoin in particular. And so as Bitcoin has emerged as a store of value and an important hedge, not only against inflation, but also against ironically enough volatility in traditional financial markets, I think corporate treasurers, others responsible for managing corporate assets are saying to themselves, how can we not afford to look at Bitcoin in particular and perhaps other digital assets as a way of preserving corporate value.

Let's touch on that point on volatility because I think ironic is the right word as of today. Let's take just Bitcoin as an example of that. The 52 week high has been above $110,000. The 52 week low has been about $49,000. That's a huge range. Are corporates really looking at Bitcoin and saying that may be a less volatile option for us in holding bonds?

Well, I think when we think of and speak of volatility, traditionally we often focus on price and appropriately, and there's no question that Bitcoin remains a more volatile asset in terms of price relative to some others. But when I speak of volatility, when I think when many corporates think of volatility, they have a broader conception. They're thinking of political volatility in particular, and the fact of the matter is that treasuries and dollar backed treasuries in particular now reflect a greater volatility in our political system that people are looking to hedge against. Bitcoin offers one way to do that, and I think that's why you're seeing such a renewed and sustained interest as an alternative.

That's actually very interesting. I hadn't really focused on that and I think about the recent week auction of US treasuries, and there's been so much dialogue around the growth in the US deficit and what does that mean long-term for this idea of the dollar in particular, but also US government issuance as the most stable asset. Talk to us about how that may have changed adoption appetite.

Well, I think the recent auction have, I think captured a lot of attention and grabbed people's attention for good reason for so many years. So many of us who grew up in a more traditional environment thought of the US Treasury as the benchmark. Oh, for sure. Right. And frankly almost boring in its predictability and stability. I think what we're seeing now as there is greater fiscal pressure as well as I think a weakening consensus on monetary policy, people are asking themselves, will that stability that was once there be there for me in six months? In six years or more? And as they start to ask those questions, the answer often points them back to alternative assets such as Bitcoin, perhaps other digital assets that may offer longer term stability against that political volatility than maybe first

Appreciated. So what do companies have to believe to go down this path? So Microsoft, for example, there was a shareholder vote on holding crypto as a reserve asset and it got voted down. Why are people not doing it yet? Is it just risk appetite? Is there a regulation issue? Is there an accounting issue? What's the resistance?

Well, I do think accounting issues can play a role in it, but I actually think the bigger explanation for that resistance comes from a misunderstanding of where we are today in 2025 compared to even last year, certainly years before. The reality is that crypto Bitcoin is no longer novel. We now have years and years of history, and this technology has proven that it is durable against some of the most intense pressures anyone could imagine. The last four years politically have been very challenging for crypto, and yet here we are with Bitcoin and north of a hundred thousand. The fact of the matter is we are now on the cusp of legislation and regulatory reforms in Washington in particular that are going to provide additional clarity and certainty to the market. And so I think there's just now much more of an understanding more generally of the potential for Bitcoin and other digital assets, and yet there remains an overhang I think, from the past that keeps certainly some corporates from fully embracing this alternative.

So what are some of the things going on in Washington at the moment that could change the landscape from a regulatory perspective?

Well, I think there are three things that are happening that are dramatically changing that landscape. One, maybe most importantly is legislation. We're seeing Congress on the cusp of passing critical legislation for market structure and stable coins that for the first time will provide for real clarity at the federal level for how to think about these markets and how to think about these assets themselves. Are they commodities? Are they more appropriately in certain cases treated as securities? We've long sought answers to these questions and the lack of clarity around this I think has held a number of corporates back with legislation. We're going to see real progress, but there's also reform at the regulatory level. The SEC, which until very recently was quite hostile to digital assets in crypto, has now embraced its mandate to provide real rules for the industry that have long been called for. We're seeing progress there. And then of course we have now the both procr presidential administration perhaps in history. I don't even know if that's really in question. And certainly as the White House under the leadership of President Trump has made it clear they expect to see the US lead in this area. We're seeing real progress on that front as well.

So what does that actually translate to in terms of corporate ability or desire to take on crypto as an asset? Let's start with the legislation and the regulation, the clarity that's coming. What is it and why does it matter?

Well, the clarity that I think will matter most will come from a definition of what is a digital asset that qualifies as a security, for example, such that the assets are subject to the jurisdiction of the Securities Exchange Commission. Alternatively, we have payment stable coins. We have commodities that also take the form of digital assets that will fall to other regulators. The Commodity Futures Trading Commission on the one hand, perhaps the OCC and the Federal Reserve on the other, all of these different agencies, this alphabet soup of agencies that often perplex, even those of us who've been in this industry for a long time have I think unfortunately led to a bit of a turf battle among the agencies or who has primary regulatory authority and real confusion over what rules might emerge from these different agencies that will govern how corporates can and must think about these assets if they hold them with the clarity finally in hand, I think you're going to see corporates finally embrace them with the full gusto.

And so when I think about the corporate boards that I'm on,

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And I've sat on lots of audit committees, one of the things you're thinking about is how your accounting accommodates volatility and changes in the prices of asset. What does that mean if your balance sheet now, if you're a public company, one of the reasons you don't want to hold volatile assets, assets is it means that translates into real swings in your share price. What does everything you've just described mean for the way in which firms will account for holding crypto on their balance sheet? And what does that mean for how shareholders in turn will see the impact of that on stock prices?

Well, accounting rules do matter, and even though they can often seem quite arcane and detached from the main concerns and focus of corporates as they plan their strategy, they do have a huge impact when it comes to digital assets and Bitcoin in particular. Historically, there have been what we viewed as discriminatory rules when applied to digital assets in that the way that the assets are marked to market have been very distinct from the way other assets have

Been. How so?

Well in the sense that you have historically been required to treat gains with respect to digital assets separately from losses or adjustments in value that have lowered their overall net impact on the balance sheet we now have the repeal of the main rule that governed, that the SEC attempted to oppose last year, something called SAB 1 21. But the more important higher order bit here is that corporates now can have confidence that even if these assets do rise and fall in value because they can be volatile, they will be treated on no better or no worse basis than other assets they might consider.

Got it. So there's just no inconsistency now in terms of how they can

Correct,

Which let's talk about from the investor perspective, that makes it much less work for the investor to have to work through it and try and figure out what's really going on.

Yeah, I think investors just want to understand that there is a common framework and a common set of rules that they must apply to whatever assets a corporation holds on its balance sheet. And I think that for the corporates themselves, there's just an operational challenge in managing volatile assets that are subject to wild swings at times in ways that are inconsistent with the way that they handle other assets. People want to have one set of rules and commit to following

Them all. That being said, let's go back to the call to public opinion, and that's sort of what's become mainstream, what's been considered more reliable. Not all digital assets feel as though they're created equal at this moment. Some coins more stable than others. There are other digital assets that aren't currencies. Talk to us about how those might be treated differently.

Well, this is why the legislation is so important. Unfortunately, up until this point, we've had very little guidance through legislation and even less guidance from the main agencies responsible for overseeing these markets. And so there have been real questions about, for example, how to treat stores of value like Bitcoin that really do operate as digital gold and how that might be very different from other assets that really are providing value in terms of securing networks and providing governance rights. That's something else that tokens can provide a payment. Stable coins are another very important area where clear rules of the road are long overdue. The legislation that's being considered and is moving forward in Congress right now would finally define each of these different categories according to their own characteristics and make sure that investors have information about each of these different categories that are consistent with their unique characteristics.

And so which ones are you seeing the greatest adoption in?

Well, there's no question that Bitcoin still remains the largest digital asset by trading volume and by market value. But what I think we are seeing as well that is tremendously exciting is that payment stable coins in particular, dollar backed stable coins such as USDC and Tether have absolutely exploded in the marketplace as corporates now have come to see that they can use these stable coins to manage their treasury, manage their payments overseas in ways that are much more efficient, much more capital protective and efficient. And so I would say that the stable coin market is also something that people should pay a lot of attention to.

Let's just unpack that a little bit because definitions are important here. And so with these kinds of stable coins we're talking about, and the Genius Act is trying to address this issuers needing to hold reserves of assets like the US dollar, which you alluded to allow consumers to redeem them if they're US dollar backed, why were corporates bother? Why not just go straight to treasuries? Why not go straight to cash and bonds?

Well, I think the real value of fiat backed stable coins, particular dollar backed stable coins, that they can be managed on public blockchains as opposed to with private intermediaries. And that ability to efficiently move the value reflected in the stable coins to pay employees in one country or suppliers in another at a fraction of the cost at a fraction of the complexity is what's particularly attractive to a lot of corporates. And that's just in terms of institutional adoption. I think you're going to see in the coming quarters and years, much more widespread adoption of stable coins and payment stable coins. At the retail level, you're seeing small and medium businesses realizing that rather than paying two or three or 10 or 20% of the value of a transaction to intermediaries in using traditional means with payment stable coins, they can drive those values down to something much less than 1%. And that is real money for real businesses that often operate on very thin margins. That's where I see the potential.

Coinbase has just put out a report on stable coin adoption. What is the population size using stable coins right now?

Well, we're now seeing tremendous adoption of stable coins all over the world. And there's no question that we now have hundreds of millions,

Hundreds of millions well

Of individuals who are using stable coins to manage their personal finances. And we think that adoption curve is only growing steeper. And so I think we're going to see tremendous adoption going forward. And in many ways, 2025 is going to look very quaint in short order

With the benefit of hindsight.

Yes.

Perfect. And just factoring into that is, and this idea of trust, let's talk about security. I feel, and this just could be perception that not a week goes by where I'm not seeing something about crypto based systems getting hacked. Do you think that there's enough confidence not in the actual value of the underlying cryptocurrency itself? Is there a sense that the systems just aren't there yet, they're just not hacker proof enough yet?

I think there have been legitimate concerns historically about the security of these networks, but I think it's important that over time people have come to understand that blockchains actually are part of the solution rather than a source of the problem. And by that, what I mean is with traditional cash, we have seen that something like three or 4% of all transactions are tied to illicit activity. That's an extraordinary number. With crypto, the number is more like 1% and falling. And so the traceability of digital assets of cryptocurrency and transactions actually offers law enforcement greater tools and more of an ability to follow the money as it were when there are illicit activities taken that are tied back to digital assets. So I think from a criminal or illicit activity perspective, digital assets are actually superior to traditional instruments like cash. But there's a bigger question about where people can have confidence that when they put a digital asset in the custody of a third party, that digital asset will be there when they need it. Safety, security, these are critical concerns for market participants, and that's why I think that with legislation and with firms like Coinbase that have a long track history, people are increasingly growing, more confident that these intermediaries can provide the safety and security that they expect.

It's interesting because there's a perception that blockchain provides anonymity to its users, and yet you've said something very interesting, which is law enforcement could perhaps more easily trace.

Absolutely.

And how do you square those two perceptions, perception of anonymity and then this idea that actually it's easier to track folks down?

Well, I think the simplest way to understand that is that with a blockchain transaction, a digital asset or cryptocurrency transaction, you're actually performing that transaction on a public database that is visible to anyone with proper software and tracking and tracing tools. And so that is why in most cases, if you talk to law enforcement, if you meet with the men and women on the ground responsible for investigating these issues day in and day out, they'll tell you they would much rather investigate a crime that has some tie to a digital asset transaction than one that took place or suspected taking place with cash.

Interesting. We've talked a about the us but I want to touch on something you said at the beginning, which is crypto being held as a reserve asset, as an inflation hedge. Now inflation feels as though, knock on wood, at sort of coming down in the us it's coming off that post COVID high, but inflation remains a real problem in a lot of international jurisdictions. What are you seeing just being in the industry in terms of crypto being adopted with greater or less enthusiasm in countries overseas with more inflation pressure than we're seeing?

Yeah, I think the simplest way to understand how powerful a tool crypto can be as a hedge against inflation is to go to countries and places where inflation is a real problem. And if you walk the streets of Argentina, if you walk the streets of Nigeria, if you walk the streets of Turkey, any country or anywhere in the world where inflation has historically and to this day remains a real threat to the value of wages earned and savings maintained, you'll see widespread crypto adoption. And that's because people there understand in very tangible, real terms that if they want to preserve the value of their assets, they need some way to hedge that against the volatile swings that they often suffer in their local currencies. And so even though here in the United States, we may be feeling more or less confident about where inflation lies, that I think the answers, the insights actually come from countries outside the United States where they've been dealing with these issues for a much longer time.

And so what has been crypto as a reserve asset for corporations overseas looked like? Are there learnings from that that the US is building on right now?

Yeah, I think that as a reserve asset, what you're seeing is that for individual corporates, there I think is a greater appreciation that more and more of this economy over time is going to be supported and undergirded by cryptocurrencies and digital assets either held by countries themselves or as a part of the overall GDP for the countries including the United States, we've seen an explosion of interest in developing their own strategic digital asset or Bitcoin reserves. And that was actually an early and very important priority that the president announced after taking office on January 20th. So I actually think here in the United States, we're seeing maybe as much or more discussion about how to create and build strategic Bitcoin or digital asset reserves than anywhere else in the world right now.

And is the Federal Reserve actively participating in those conversations?

Well, the Federal Reserve will absolutely have to play an important part in this discussion and the adoption of Bitcoin or other digital assets as a reserve asset. But I actually think that what would be most critical for unlocking this potential is legislation. Right now, as I mentioned, the focus in terms of legislation is on market structures on stable coins, but there is important legislation already proposed in both the House and the Senate on a digital asset or Bitcoin reserve. And so I think Congress will have to work through these issues with inputs from the Federal Reserve and from other agencies. And I think as soon as we move forward with the current legislative priorities, we're going to see attention turn to that as

Well. So where does Coinbase based play in all this? Let's talk about the growth in Bitcoin as one example, companies, whether it's MicroStrategy, whether it's GameStop and others buying more Bitcoin. Are they doing it through a Coinbase? Where are you guys playing?

Well, we play in a number of different parts of the system. We are now 13 years old, which in many industries makes us a kid. But in the world of digital asset, cryptocurrency makes us a bit of the grownup.

Yeah, you are the best in the

Industry a little bit, for sure. And so while we started out with a much more limited modest suite of products that were focused on retail investors, simply in the first case, wanting to hold digital assets in a wallet and then be able to buy and sell them using cash, we now have a very robust institutional business that supports many firms that are managing Bitcoin and other digital assets on their balance sheets and that want to trade these assets for other purposes. And so I do think that as more companies look to crypto as a part of their portfolio, they're going to look to Coinbase as the safe place to do that type of work, and also frankly, one with the track record that can give them and their shareholders confidence that this asset class will be managed by the treasury in the same way as other asset classes with the same safety and security that they expect.

So is that happening in practice? I mean, take us a little bit behind the scenes. Are you seeing big blue chip corporations coming to you as the chief legal officer? I've got to imagine if they're even considering going down this path. They've got a whole team wanting to spend time with you

Personally. Yeah, we're seeing tremendous interest, and not just curiosity, but planning and expectations that they will adopt these assets as part of their corporate treasury. And the reason I think is pretty straightforward. Everyone is always initially, I think, concerned about being the first or the second mover in these types of activities, but now we're seeing, as you mentioned, public companies all fully embracing this and demonstrating that this is a better way to manage treasuries. And so yeah, we're very confident that Coinbase will certainly play a significant role in that market. There will be other worthy competitors as well, but we think we have a track record at the second to none.

And how does that change your business model? Because if all it takes would be fewer than a handful of really big corporations say, we're doing this right, we're going to shift into crypto and we're going to move that through Coinbase, that totally changes your business model in terms of the volume coming through your platform when you have, to your point, historically been more retail investor focused.

Yeah, I think the diversification of our business is something that has been underway for some time. We're now seeing, I think a bit of an inflection point as more and more traditional institutions realize that crypto is here to stay. It's not going anywhere. It's no longer a novel asset. And so it's important that they treat it with the seriousness and that they would treat any part of the financial system that is now well established, and that will be here in the future. I think for Coinbase as a company that with that diversification will just come a greater predictability and greater opportunities for us to play more and more of a role in the financial system than simply just a place to buy and sell Bitcoin.

So if I were to ask you, Paul, this is a really unfair question, but I'm going to ask you anyway. If you're going to look into your crystal ball by the end of 2027, what proportion of the s and p 500 would you bet hold some amount of crypto as a reserve asset?

Well, you're talking within the next two years or so. I think you're going to see most of those firms.

Wow.

Looking at the opportunity, and while I'm hesitant to put a number on how many of them will actually pull the trigger and put crypto on the balance sheet, I think for most corporate treasurers and finance organizations, it will be a considered part of a good governance and standard practice to evaluate whether it makes sense for any one company.

Paul Grail, chief Legal Officer at Coinbase, thank you so much for joining us.

Thanks for having me.

I'm Anne Barry, and thank you for tuning into After earnings, the show that brings you up close and personal with the executives behind the world's most interesting publicly traded companies. If you learn something today, don't forget to like, subscribe, and share with your friends. Upcoming episodes will feature conversations with top executives from Axon, ZoomInfo, Potbelly, and many more you won't want to visit. So come back and we'll see you soon.