San Francisco Coinbase is best-known for being the poster child for cryptocurrency trading in the U.S., but a relatively new service has been increasingly making headlines: Coinbase Analytics.
The product licenses Coinbase's data and analytics software for AML to third-parties including government agencies, which has drawn the ire from certain factions of the crypto world. In an episode of What Bitcoin Did, host Peter McCormack asked CEO Brian Armstrong whether new service was at odds with the ethos of bitcoin.
"I'm a big supporter of privacy," Armstrong said. He said the product supports Coinbase's core business of cryptocurrency trading inasmuch as it builds "goodwill" with regulators by making them also their clients. That also decreases the potentiality that they would probe Coinbase about specific customer data.
"If we just kind of like tell them, 'hey, you know, F off' like we don't want to help you and we're just going to develop a kind of hostile relationship with them where they're just going to request even more customer data from us," Armstrong said.
As reported by The Block in June, records showed that the U.S. Drug Enforcement Administration (DEA) and the Internal Revenue Service (IRS) intend to buy Coinbase Analytics. Subsequent public records showed that Coinbase struck deals with the U.S. Secret Service and the IRS to use the software tools.
Armstrong added that the service is commonplace and if these agencies weren't a Coinbase customer they could easily get access elsewhere.
"The main thing is that it's not lubricating anything in my mind because they have many options of where to get that information. There are three or four major blockchain analytics companies," he said. "They can even just if they really wanted to build it themselves, it's publicly available data. Right. So they're going to do it one way or another."