Future of Finance: Coinbase’s Alesia Haas on why Ethereum isn’t a security and the crypto industry rebuilding trust after the FTX ‘travesty’

Coinbase is the largest centralized crypto exchange in the U.S., posting $273 million in net income for the fourth quarter of 2023, putting the firm’s net profitability for all of 2023 at $95 million.

“Coinbase has always taken a long-term approach focussing on building in a compliant manner, even when it wasn’t the popular choice,” CEO Brian Armstrong said on a February earnings call. “Many of our competitors cut corners and broke laws to get big fast, and we’ve seen how that strategy played out.”

Alesia Haas joined the company in April 2018. She previously was CFO for Sculptor Capital Management (formerly Och Ziff Capital Management Group), a global institutional alternative asset manager. She also served as CFO and head of strategy for OneWest Bank.

In a conversation with Fortune, Haas shared insights on Bitcoin’s record high, the latest crypto bull market, the SEC’s take on Ethereum, Sam Bankman-Fried’s sentencing, and what drew her to the world of crypto from traditional finance.

(This interview has been edited for length and clarity.)

Earlier this month, Bitcoin reached a record high above $72,000. Can you share some insight on what this means in a larger sense?

I think it’s important with crypto to zoom out and look at what has happened since the Bitcoin white paper and crypto first came on the scene. You’ve seen four price cycles. What I love about looking at these price cycles is that every peak is higher than its last peak. And every trough is higher than the last trough. 

If you look at this, you have a lot of volatility, but there is this steady up and into-the-right curve. When you look at the one-, three-, five-, and 10-year return of Bitcoin against every other asset, it has been one of the top performing assets over any other comparable.

A lot of this was driven by the Bitcoin ETFs. What I think is important to note is that ETFs unlock new demand for this asset class. Previously, a lot of investment advisors couldn’t access Bitcoin because of their investment mandates. Now, they can buy Bitcoin in an ETF wrapper, and so it opens up new available capital.

What does Bitcoin’s rise mean for other cryptocurrencies, particularly Ethereum? 

I think that we’re starting to see differentiation between different cryptocurrencies and Bitcoin, where Bitcoin is a store-of-value asset, and people are putting it in their portfolio as an important store-of-value in wealth creation.

Ethereum has become the protocol that developers are increasingly choosing to build decentralized applications on top of. While Bitcoin is the largest asset, we generally see ‘a rising tide lifts all ships’ effect where crypto then comes up. But you’re starting to see differentiation because people are choosing Ethereum, and it is increasingly going to change depending on developer activity and user activity of that platform. Stablecoins and NFTs are built on Ethereum. There are just a lot of new use cases built on top of that protocol.

Speaking of Ethereum, what’s the latest with this SEC now attempting to define it as a security?

Ethereum is not a security. Historically, the SEC has repeatedly said that Ether isn’t a security. The CFTC has said that Ether isn’t a security. The core problem here is that we still do not have comprehensive crypto regulation at the federal level in the United States. And this is something that we feel passionately about. It’s so critical to get regulatory clarity so we can have a clear, equitable, applied regulatory framework that will protect consumers and ensure responsible markets—and also protect businesses like Coinbase, so we know how we can bring compliant products to the market and continue innovation here in America.  

What can we learn from the latest crypto bull market?

In general, what we’re seeing is similar to past bull markets, whereas crypto prices rise, you see an increase in volatility, then you see an increase in engagement. As we shared on our Q4 earnings call in February, we saw elevated engagement, net inflows across the board in retail institutional, and we saw higher trading volumes.

With almost $12 billion of net inflows into ETFs, we’ve seen a market cap of over $2.5 trillion. What this does is it puts crypto back in the headlines. It has become a topic of conversation in households. And we’re seeing really great engagement from customers who sort of went dormant a little bit in 2021, and they’re saying, “Oh, this asset class is back.”

The crypto sector nosedived after FTX imploded and cofounder Sam Bankman-Fried was arrested. He was just sentenced to 25 years in prison. Has the industry finally turned a page?

Well, fraud is fraud. And I’m pleased to see the process being followed when you have fraud in the markets. It’s a travesty that occurred. But I think we’ve moved on, and I think the market has largely moved on. Coinbase was always focused on compliance. We are excited to build and regain the trust of our customers. But there has been a flight to quality. We’ve seen that flight to quality now over the past year. And we’re pleased to continue to see people’s focus and growth on good companies here.

Before joining Coinbase, you worked in asset management, as a CFO, and held senior roles at Merrill Lynch and General Electric. What most attracted you to your current company?

I’m old enough that I grew up in the early internet era and have just watched the transformation of how technology creates new use cases. When I learned about blockchain, I could see that if you tokenize real-world assets—and send value peer to peer—that was going to create a more inclusive, faster, and cheaper financial system. And that was such an exciting thing to be a part of.

I have worked for banks and asset managers, and I saw how many people touch the transaction just to move money from me to you, and how many different steps and different market participants it takes. I saw the cost. I saw the friction. And I said, “If technology solves this, it will be adopted. It’s a matter of when, not if.” I wanted to be part of that excitement in the journey to build trusted products in this ecosystem.

Coming from traditional finance, I knew that if you’re holding customers’ assets, their wealth, their investments, you need to become a trusted brand. I thought I could really contribute value to Coinbase.

How would you describe the role of digital assets in the future of finance?

Well, first of all, it’s already here: 52 million Americans own crypto. We now have ETFs for anybody with a retirement account to own crypto. You can now send a U.S. dollar in the form of a stablecoin to anyone in the world, anywhere, anytime, cheaply and instantly. It’s amazing that we’re already here. 

I think what we’ll see is an increasing number of transactions happening on the blockchain. We’ll tokenize more real-world assets. Just last week, BlackRock announced they’re tokenizing a money-market fund. Now we have money-market funds where you can earn high yields but in tokenized form. 

These are new ways that we can bring the global world together in a peer-to-peer way—fewer intermediaries, lower costs—and tokenize real world assets, which makes those assets more available to more people in more markets. I think that’s really exciting.