The crypto market is changing rapidly. So much so that most crypto companies are now hiring former regulators to tighten the rules for the crypto industry. There are currently wide cracks in the industry with billions of dollars slipping through from consumers and funds.
But for some of the former regulatory officials, it’s difficult to keep the new job, and for good reasons. The crypto market has become a carefree environment. Finding the next step is a major challenge for some.
In March this year, Jay Clayton joined the industry. It is the former chairman of the US Securities and Exchange Commission (from 2017 to 2020). The official turned to the crypto industry as a principal advisor. But some of his colleagues struggled to take the heat.
Top executives step down from key positions
Chris Giancarlo is the first example. The former regulator and board member of the Commodity Futures Trading Commission stepped down from his post this week – four months after taking office.
Brett Redfearn, the former high-ranking SEC official, resigned this week after spending four months at crypto exchange Coinbase.
Why the quick departures? The young industry is “too hot to bear.” The resignations simply reflect the problems former officials face. The market desperately needs to be regulated and new laws are needed to do so.
Calls for new powers to oversee crypto industry
Gary Gensler, regulator and chairman of the Securities and Exchange Commission (SEC), is now calling for new powers to manage crypto exchanges.
This regulatory push has led to major crypto exchanges consolidating their compliance teams as attention from the now $2 trillion crypto industry increases.
FTX, one of the largest derivatives crypto exchanges, has answered the call. In recent weeks, FTX appointed Ryne Miller as its new general counsel. His job is to make sure FTX.US complies with new U.S. and global regulatory requirements.
Binance has appointed Richard Teng, the former CEO of the Financial Services Regulatory Authority of Abu Dhabi Global Markets, hired.
The fast-moving crypto market has attracted many experienced bankers to the platform – sparking an influx of experienced former regulators into the crypto-financial markets.
The idea of regulating the crypto market is similar to regulating the derivatives industry after the 2008 global financial crisis, with many regulators who worked on new rules a decade ago now moving into the new market.
The same is repeating itself as former bankers enter the crypto market. As the fledgling digital asset market and its legitimacy continue to evolve, newly appointed managers are considering how to apply their banking experience to it.