Podcast: Coinbase View on Future of Crypto, with VP of International Policy Tom Duff Gordon

Hi Fintech Architects,

In our latest podcast episode, Lex interviews Tom Duff Gordon, the Vice President of International Policy at Coinbase, where he drives the company’s engagement with policymakers in global markets across the UK, Europe, APAC, ?LatAm, and the MENA region.?They discuss the following key points:

• The importance of policy work in the financial services industry, especially after the 2008 financial crisis, and how policy teams collaborate with regulators to shape the regulatory environment.
• Reasons why the financial services industry is heavily regulated, including the systemic and interconnected nature of the financial system and the need to protect retail consumers.
• The regulatory approaches to cryptocurrency and digital assets in different jurisdictions, with Europe (MiCA), the US, and other regions like Asia. The discussion highlights the diverse and evolving nature of crypto regulation globally.
• The challenges faced by the US in developing a coherent regulatory framework for crypto assets, particularly the jurisdictional tussle between the SEC and CFTC.
• Coinbase's efforts to advocate for clear and balanced crypto regulation, including through grassroots initiatives like "Stand with Crypto".
• Coinbase's evolving product strategy, expanding beyond its core exchange business into areas like custody, lending, and infrastructure for the broader crypto ecosystem.

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Background

Tom?previously served as Managing Director at Credit Suisse, Head of Public Policy Europe and UK, where he had responsibility across all areas of regulatory policy and government affairs and chaired the internal global Credit Suisse policy committee, which coordinates positioning on international and cross-border issues.

Tom is on the Board of the International Regulatory Strategy Group (IRSG), the leading, cross-sectoral UK regulatory policy trade association, where he chaired one of the standing committees. For three years he co-chaired the main policy committee for the Association of Financial Markets in Europe (AFME).

Tom?holds an MA degree from the University of Oxford. He began his career as a consultant at Accenture.

Timestamps

• 1’02: Shaping the Future of Finance: Tom Duff Gordon’s career involving Policy, Crypto, and Global Regulation
• 7’30: Preventing Financial Panic: How Regulation Mitigates Systemic Collapse
• 13’12: From Bank Runs to Balance Sheets: Tackling Systemic Risk and Preventing Financial Contagion
• 16’32: Regulating Crypto: Global Progress and Emerging Frameworks
• 19’42: Expanding Crypto Regulation Worldwide: Frameworks, Challenges, and the Road Ahead
• 28’18: Crypto and the SEC: Unpacking America’s Contradictory Approach to Regulation
• 34’30: Crypto Politics: Why the US is Divided While Europe Stays Unified
• 41’30: Scaling Crypto: Coinbase's Multi-Vertical Strategy and Ecosystem Vision
• 45’28: The channels used to connect with Tom & learn more about Coinbase

Illustrated Transcript

Lex Sokolin: Hi everybody, and welcome to today's conversation. I'm absolutely thrilled to have with us Tom Duff Gordon, who is the vice president of international policy at Coinbase. We're going to talk today about the crypto industry, the regulatory environment, and the global views that Coinbase has around the world. I'm really excited to learn from Tom. And with that, welcome to the podcast.

Tom Duff Gordon: It's great to be here. Hi, Lex.

Lex Sokolin: Let's start off with a little bit about you and specifically what kind of career you've built in financial services. What are the kind of roles that you've been interested in and how did it come together?

Tom Duff Gordon: Yeah, happy to start there. So, I guess I've been in financial services for quite some time. I'll go back and start around 2005, 2006 when I joined Credit Suisse. I started as a banker doing mergers and acquisitions mostly in the FIG space. So, looking at other financial institutions. I then moved into strategy. And then after, the global financial crisis began to strike mid 2007, 2008. I was getting more and more interested in the policy side of what was happening in financial services, and then transitioned into the policy team, the European policy team at Credit Suisse where I stayed as we kind of went through that journey of re-regulating finance after the global financial crash and ended up running that public policy unit within Credit Suisse from about 2017 to 2022.

Whilst I was doing that, not just working for Credit Suisse but also was very involved in some of the trade associations, both the EU ones and the UK ones, I did some work with AFME, which is the big capital markets trade association covering Europe, where I chaired the public policy committee for a number of years. And I was also on the board of the IRSG, which is a cross-sectoral financial sector trade body affiliated to the city of London.

So, it was really fun to do some stuff for Credit Suisse really focused on post-financial crisis, reg reforms. We did a lot of work in the prudential space. Credit Suisse was pretty innovative when it came to thinking about things like bail-in and how to rescue banks that were getting in trouble. But towards the end of my stint at Credit Suisse, it became clear to me that the future of finance, particularly if your policy person was going to be either in the green space associated with the green transition and ESG and all that good stuff, but also digital finance. And particularly because from about 2018 when the EU brought out their FinTech action plan and then 2019, 2020 when we started to see MiCA, I was getting more focused on digital finance and super interested in it.

So, when Coinbase came knocking in late '21, early '22, I was more than delighted to join. So, I've been here at Coinbase now coming up to two and a half years running, as you said, the international policy team. So, everything focused on all of the policy work outside of the US.

Lex Sokolin: That's an amazing speed run through a very storied career. I'm going to reel us back a bit to the very beginning and the simplest entry point. What is policy in the context of financial services? And this is in your Credit Suisse days, what did it mean to work on policy?

Tom Duff Gordon: There was a time when policy was not interesting. So, when we think about policy, it is how do we think about what new rules and regulations need to be applied to the financial services sector. It's clearly a highly regulated sector, and so policy has to do with thinking, "In what direction should we take that regulation? Is it fit for purpose? Have we got new innovations? How do we incentivize moving activity into certain spaces? How do we disincentivize others?" And I think for a while, whilst the financial services sector was moving on a steady even keel, policy work was not moving very quickly and perhaps it was not necessarily the most interesting part of the sector. But certainly after the financial crash that we saw in late 2007 and then from 2008 accelerating onwards, it became extremely clear that there were big missing pieces of regulatory institutional infrastructure, but also big pieces of the rule book that need to be looked at again.

And so the policy work that was associated with, on the public sector side, what are those gaps and how do we fill them? And then from a private sector side, policy teams like the one that I was part of and then led at Credit Suisse were very much supposed to be the collectors of the public sector partners to talk from a practical perspective, help the policymakers on a public sector side figure out what to do and how to do it by providing those insights from the ground. So working with all of the experts from across the bank, particularly in fixed income markets and capital markets where a lot of the troubles had started and helping to provide that input, some of the empirical data and then our thoughts and perspectives from a practitioner perspective with regards to how we felt the future direction of travel should go.

So, it went from being, I think, a bit of a backwater to becoming, I think, a very highly strategic function when you think that ultimately profit and loss for some of those big financial institutions is to a large extent determined by how well they can navigate the regulatory environment. And then policy teams that have an ability to influence outcomes in that space then become central to institutional strategies. So, it was really exciting to become part of that movement. And I think we've seen now a broader recognition, particularly in fields like crypto where it's almost a blank slate and we're seeing rule books being developed over time. Getting those right is going to be absolutely vital to the way that this industry can kind of grow and scale. And if you're passionate about the transformative potential of this technology, then getting those rules right is critical. So being part of that journey from almost the ground up is something that gets me out of bed every day and is the most exciting part of the job.

Lex Sokolin: We'll get to crypto in a bit, but the ground truth is that there are public policymakers in some sort of legislative body and they've got opinions about what people should be doing. And then the institutions that are impacted by the various policies that could come into play also develop the capability to inform those policymakers, to educate them, collaborate with them in order to influence something that might be a little more appropriate or fit for purpose.

Stepping back from that, at a very high level, why do financial services get regulated so much? Why does it, and I'm scared to say the words "need to be regulated" because that's already an assumption, but why does finance get regulated so much and is in the crosshairs of folks trying to put various guardrails around it? What's the reason for that? And as a corollary, who gets to decide what those guardrails are?

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For those that want to subscribe to the podcast in your app of choice, you can now find us at Apple, Spotify, or on RSS.