Coinbase Staff Leaving over Apolitical Stance
Recently Coinbase CEO Brian Armstrong posted a blog on his company web site speaking to how Coinbase would approach social and political issues going forward.
His position is that "Coinbase is a mission focused company", and while listing out a number of goals for the company he also listed a number of areas where there will be minimal focus if the "causes [were] not directly related to the mission [of the company]."
To say this set off a firestorm would be an understatement. At the time of this writing, 5% of the Coinbase staff has departed and executives have lined up in support on both sides of the argument.
Twitter and Square CEO Jack Dorsey pointed out that the primary mission of Coinbase is in support of Crypto Currencies like Bitcoin that are traded on the Coinbase platform. Dorsey tweeted that "#Bitcoin (aka "crypto") is direct activism against an unverifiable and exclusionary financial system which negatively affects so much of our society."
The challenge is that it's almost impossible for any person or business to straddle the line of politics or social justice. It's inherently human to lean one way or the other, or posses a mixture of beliefs that define who we are, what we support and believe.
The same is true for a business since there are laws and regulations around hiring and discrimination that define how a business must act.
However, Armstrong is trying to set an apolitical standard for Coinbase that's almost impossible to achieve.
Marty, fire up the DeLorean we're going back in time...
On January 21, 2010, the Supreme Court issued a ruling in the case of Citizens United v. Federal Election Commission (FEC), which overruled an earlier decision in Austin v. Michigan State Chamber of Commerce (Austin), that allowed prohibitions on independent expenditures by corporations.
You've likely seen this ruling referred to as Citizens United or the ruling that began treating corporations as people.
The Supreme Court found that resolving the question of whether the ban in Federal Election Campaign Act§ 441b specifically applied to the film based on the narrow grounds put forth by Citizens United would have the overall effect of chilling political speech central to the First Amendment. Instead, the Court found that, in exercise of its judicial responsibility, it was required to consider the facial validity of the Act’s ban on corporate expenditures and reconsider the continuing effect of the type of speech prohibition which the Court previously upheld in Austin.
This ruling was huge and polarizing, and as NPR pointed out at the time, "it ruled that corporations have the right to spend money in candidate elections, and that some for-profit corporations may, on religious grounds, refuse to comply with a federal mandate to cover birth control in their employee health plans."
This is important since Coinbase is now taking the position that it will limit action on political and social causes that aren't directly tied to their corporate mission. Once again, this is a difficult line to straddle. Especially since Coinbase has made numerous contributions to candidates since its inception, made possible by the Citizens United ruling.
A search of the FEC's web site shows Coinbase has made numerous and sizable donations to various candidates and political action committee's (PACs) since its formation in 2012.
While it's up to others to judge Coinbase's position as it relates to its corporate mandate as they try to straddle the socio-political line, their actions through candidate and PAC support make it nearly impossible to maintain since candidates and PAC's don't straddle a line and generally choose a side in any debate.
Just as asking an individual to straddle the socio-political line it will be impossible for Coinbase to maintain a position that's more than optics for the investor community.
Since the goal or mission of the business is to create shareholder value, will Armstrong begin to re-assess his position if it begins to alienate customers and impact their revenue?