Dive Brief:

• Speaking at the Goldman Sachs U.S. Financial Services Conference Tuesday, Emilie Choi, president and chief operating officer of Coinbase, reiterated the company’s desire for cryptocurrency “rules of the road” from a single regulatory agency.
• Choi said Coinbase, the U.S.’s largest crypto exchange, leaned into regulation early on, but it craves more guidance from regulators and an even playing field with financial services. “... If you’re touching people’s money, then at some point, you’re going to have to play nice with regulators,” Choi said. “I think that the biggest issue we have right now is that there’s just a lack of regulatory clarity.”
• "We have tons of M&A opportunities," Choi said. "The team is exhausted. And it's global. We're gonna take advantage of that because some of these are once-in-a-lifetime opportunities."

Dive Insight:

As cryptocurrency becomes more mainstream, it’s most likely to be “when,” not “if,” more regulation is coming. Last week, U.S. Securities and Exchange Commission Chairman Gary Gensler urged crypto companies to reach out to the agency to register, noting that many cryptocurrencies qualify as securities and worrying that investors are too vulnerable. The Commodity Futures Trading Commission, too, is vying to police cryptocurrencies.

In laying out its regulatory vision, Coinbase said in October that it preferred a "separate framework" and a "single" regulator for digital assets. Choi emphasized again on Tuesday that oversight from a single agency is more important than which regulator is handling the oversight.

“It’s an arduous kind of thing when you’re trying to ship great products to customers, and you have to go through these unfair hoops,” Choi said. “What we’ve asked for from regulators is, can we just have clarity about what the rules of the road are, and then, can we tend to have one agency? It could even be an existing agency like the SEC or CFTC.”

Coinbase sold shares to the public for the first time in April, and has acquired more than 13 companies this year. Choi, who left LinkedIn to join the crypto company in 2018, noted the “super expansive” market opportunity and touted her history with mergers and acquisitions. 

She said the company plans to act on the “once-in-a-lifetime opportunities” before others in the market catch up. 

As it looks to diversify and grow, Coinbase in November acquired Unbound Security, an Israeli company focused on token storage and security, Bloomberg reported. Coinbase also announced the purchase of firms Agara and BRD last month.

“The problem with most CEOs is they’re like, oh, we can build this. We can build this. It’s fine, it’s easy,” she said. “[Chief Executive Officer] Brian [Armstrong]’s like, no, let’s bring entrepreneurship inside, inside the confines of Coinbase. Let’s bring entrepreneurs in here. They can help us build, they can help us think about things in new ways. And I think it’s very refreshing, to have that kind of an attitude.” 

In January, Coinbase bought blockchain infrastructure company Bison Trails — an acquisition said to be valued at more than $80 million, per Fortune — providing the foundation for Coinbase Cloud. Naming online retailer Amazon as a role model of the crypto company, Choi said Coinbase Cloud will be "a huge part of our business going forward.”

“Our biggest issue at Coinbase is that we have no dearth of opportunities,” Choi said.

Choi also acknowledged “the No. 1 question” for investors: The company suspects a market compression of trading fees could reduce its main revenue source at some point, but it hasn't seen signs of that yet, she said.

In light of trade fee revenue being unpredictable, the company is diversifying, trying to shift to steadier forms of revenue. Customers are more than willing to pay typically higher fees for the security Coinbase offers, Choi asserted, and the company hopes to grow its subscription services. 

“The more that those subscription services revenue streams can pay off our operating expenses such that the trading revenue is the gravy on top, that’s a great situation to be in,” Choi said.

Looking ahead, the company has its eyes on the utility phase of crypto, including NFTs, or non-fungible tokens, and the Dapp marketplace for decentralized applications, from which Armstrong “believes the next billion users from crypto will come,” Choi said.

She credited other players like Square (now Block) with bringing legitimacy and branding to the crypto arena, but noted they don’t have “crypto DNA” and tend to focus on Bitcoin alone. On the other side, crypto-focused competitors like the exchange Binance aren't leaning into regulation like Coinbase is, Choi said. 

Choi took a jab at rival Crypto.com, mentioning competitors paying “an enormous amount of money for stadium deals and so on.” The crypto exchange recently bought naming rights to the former Staples Center in Los Angeles for $700 million, CNBC reported.