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In the past decade, former regulators at the core of the mainstream US financial market are wrestling with new roles in the rapidly changing cryptocurrency industry, some of which have only lasted a few months.
In the past six months, cryptocurrency companies have snapped up officials from all corners of the Byzantine U.S. regulatory network, keen to prepare for a potentially stricter industry rule. Consumers and funds.
Jay Clayton, who served as the chairman of the US Securities and Exchange Commission from 2017 to 2020, became the latest former official to switch to the crypto industry. join in Joined the advisory board of the cryptocurrency infrastructure company Fireblocks in August and served as an advisor at One River Digital Asset Management in March.
However, some of Clayton’s former colleagues have entered the field of encryption, and they have been struggling to find a location suitable for a more arbitrary environment.
This week, Chris Giancarlo, the former chairman of the Commodity Futures Trading Commission’s derivatives market regulator, resigned from his position on the board of directors of the crypto lending platform BlockFi four months after taking office.
Brian Brooks, the former head of the OCC banking supervisory agency, resigned from his position as Binance US CEO in August, just three months later. Brett Redfearn is a former senior official of the US Securities and Exchange Commission. Before leaving in August, he worked for the listed cryptocurrency exchange Coinbase for four months.
The rapid departure reflects the tensions faced by former regulators when entering this still young industry, leveraging their experience in introducing and enforcing new rules in a market facing growing calls for regulatory intervention.
He told the Financial Times that for Giancarlo, a long-time cryptocurrency champion, the decision to step down was because he tried to simplify his involvement in the industry and focus on fewer projects. He will continue to serve as an informal adviser to BlockFi, but intends to pay more attention to his digital dollar project, which explores the creation of a U.S. central bank digital currency, and promotes his upcoming book on the subject.
“It is a challenge for regulators to find the right point for them to engage with this market, and I think we all need to consider our priorities,” Giancarlo told the Financial Times.
Brooks left for different reasons.He cited “differences in strategic directions” and hoped that his former colleagues at Binance “success” when he Announce He resigned on Twitter. His decision was made at a time when Binance is facing increasing regulatory scrutiny around the world.
Redfearn told the Financial Times that he also left due to a strategic change. Coinbase has hired Redfearn to work on digital asset securities, which will be largely subject to existing securities regulation, which is different from certain cryptocurrencies (such as Bitcoin) that regulators consider them as commodities. Coinbase decided to withdraw from the project, causing Redfearn to leave.
A Coinbase spokesperson said: “We have recently prioritized digital asset securities.” “In view of this, Brett Redfearn has decided to seek other opportunities in the capital markets and securities sectors.”
The regulation of the crypto market has given new impetus to the explosive growth of crypto trading in the past 18 months and the appointment of Gary Gensler as the chairman of the US Securities and Exchange Commission. Gensler is the inflammatory regulator responsible for implementing the 2010 Dodd-Frank Act in the CFTC and tightening the rules of the over-the-counter derivatives industry. He quickly called for new powers to monitor cryptocurrency exchanges and assets.
As the focus on the current $2 trillion industry intensifies, this has prompted major exchanges in the fast-growing crypto derivatives field to strengthen their compliance teams.
FTX acquired the LedgerX platform regulated by the CFTC on August 31 and appointed Gensler’s former legal counsel Ryne Miller as its new general counsel in recent weeks. FTX is one of the largest cryptocurrency derivatives markets.
“Miller’s main goal will be to ensure that FTX.US continues to respond to and comply with emerging US and global regulatory policies,” FTX said at the time.
Binance is the largest exchange for digital asset derivatives contracts. The exchange stated that its goal is to become a “leader in regulatory compliance” when it hired the former chief executive officer of the Abu Dhabi Global Markets Financial Services Regulatory Authority. Richard Teng (Richard Teng), he had previously spent more than ten years with the Monetary Authority of Singapore.
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Other well-known employees remain in the encryption industry. Gensler’s successor to the CFTC, Mark Wetjen, joined the exchange operator MIAX in January 2020 and is responsible for its expansion in the field of futures and digital products.
The influx of former regulators is the latest wave of experienced financial market workers entering the digital asset market, and the fast-paced growth here has been attracting bankers for many years. The potential regulation of cryptocurrencies is seen as similar to the efforts to regulate the derivatives industry after the global financial crisis, and many people who made new rules a decade ago are now entering new markets.
“I think this is very similar to what we did with the derivatives industry after 2008,” said a former banker who entered the crypto world. “It’s the same movie again. The legitimacy of this asset class continues to increase, and we are all figuring out how to apply our experience to it.”
Additional reporting by Michael Mackenzie in New York