Regulatory pressures are mounting for companies that create, host and trade digital currencies. Securities and Exchange Commission Chairman Gary Gensler said this month that he doesn’t see much long-term viability for cryptocurrencies, stressing the importance he places on investor protection and regulatory oversight of the market. Mr Gensler has repeatedly compared the crypto market to the Wild West and urged crypto trading and lending platforms to register with the SEC, saying they are likely offering unregistered securities in violation of federal law.

Former regulators have joined cryptocurrency firms in recent years, including former SEC chairman Jay Clayton and Jaikumar Ramaswamy, previously a Justice Department official in charge of asset forfeiture and money laundering. money.

The cryptocurrency unit of the popular Robinhood Markets trading platform Inc.

and Binance Holdings Ltd., a large cryptocurrency exchange, have both beefed up their compliance staff in recent months. Binance said this summer it was expanding its international compliance team, a move that came as authorities in the UK and Japan said the company was not registered to operate in those countries. Meanwhile, last week China strengthened its tough stance against the industry by declaring cryptocurrency transactions illegal.

Hamlyn Williams said the pace of executive search for compliance has accelerated over the past 15 months. The recruiter has placed seven CCOs at fintech and crypto companies in the past five months alone, said Will Brown, executive search manager for financial services at Hamlyn Williams.

Companies in the crypto and fintech industries, many of which are launching their businesses and seeking seed funding, are looking for compliance officers to help them manage complex regulatory issues, such as obtaining a license. to operate in the United States, Mr. Brown mentioned.

“It is becoming almost critical for the company [for these firms] to have a compliance person, ”said Brown, who worked in executive search for seven years.

Fintech and crypto startups face a competitive market for talent, he said. The talent pool typically includes former regulators who recently left government and executives from other financial technology or crypto companies as well as banks. But investing in a startup often requires a fit with the culture of the company and the risks it faces, and these compliance officers will have to navigate an opaque regulatory landscape and potentially less financial and human resources, he said. -he declares.

The crypto industry, however, has matured to such an extent that it has started to attract professionals from banking, Mr Brown said.

“A lot of people in the banks want to switch to crypto,” he said. “It’s interesting and it shows a new challenge… There is no inheritance problem, there is a great opportunity to build a function from scratch. “

The salary these startups offer CCOs is slowly catching up with the pay of traditional financial institutions, with salaries typically ranging from $ 250,000 to $ 450,000 per year, and often equity stakes on top of that, he said.

The skills required of the ideal CCO candidate for a crypto company can vary, Mr Brown said. The desired experience for a candidate might include financial crime compliance, creating “know your customer” programs, and developing compliance programs that meet SEC requirements, he added.

Mr Clayton, who stepped down as chairman of the SEC in late 2020, returned to the law firm Sullivan & Cromwell LLP and this summer he joined cryptocurrency custody platform Fireblocks Inc. as that advise.

The crypto industry will increasingly focus on compliance issues, seeking to align crypto technologies with conditional regulatory principles, he said.

“These types of products… whatever function they perform, they will follow the same rules and regulations that they replace,” Mr. Clayton said. For example, if a crypto asset is used to transfer money around the world, he said, the same anti-money laundering principles should apply to those transfers.

Former regulators are ready to provide advice to the crypto industry, Clayton said. “You have experienced a radical technological change in our markets. How exactly to map compliance to this technological change is something that needs a lot of attention, ”he added.

Mr Ramaswamy, a former head of the Department of Justice, has been head of risk policy, compliance and regulation since late 2019 at cLabs, a financial technology company that works on Celo, an open source ledger initially focused on on mobile phones. After about a decade of eliminating federal white collar crime, he said he was drawn to the opportunity to create a culture of compliance at a financial institution.

Previously, Mr. Ramaswamy was Head of Enterprise Risk Management at Capital One Financial Corp. Switching from traditional finance to crypto gave him the opportunity to “come downstairs” to shape things, he said. He believes the crypto industry is at a crossroads as the industry becomes increasingly sensitive to compliance issues and tries to proactively resolve them, which requires a new way of thinking, he said. -he declares.

“I think this is one of the few places where, as a compliance professional, you can help shape the industry,” he said.

Write to Mengqi Sun at [email protected]