We asked the Deputy General Counsel and Global Head of Compliance of SafeMoon – a cryptocurrency and blockchain company – some key questions about today’s compliance challenges for the crypto space and advice going forward. Below are his answers.
How do you see the regulatory landscape evolving for the industry?
“In light of recent enforcement actions taken by the SEC and CFTC involving large exchanges, as well as the U.S. Government’s refocused attention on the regulation of virtual assets and the decentralized finance (DeFi) space, efforts are well underway to tame what has been referred to as “the Wild West” of crypto.
In the fields of virtual assets and blockchain technology, [this type of attention] means we have moved on from the false premise of a decentralized system operating outside of any regulation, ignoring, for example, the constraints of traditional anti-money laundering (AML) principles.
Now, as we see the need to incorporate such principles, the challenge is to do so without undermining the fundamental concepts of DeFi. The need for more AML checks will also lead to increased privacy compliance obligations, as operators will need to collect more user data to satisfy AML checks.”
What are the biggest compliance challenges the industry faces this year?
“Uncertainty. Innovative businesses thrive on regulatory certainty. The most active regulatory bodies have generally relied on enforcement actions to carry out their agendas, rather than communicating and then applying detailed and specific parameters. This means that companies have to figure out what the rules are by analyzing and interpreting those enforcement actions.
Legislation and consistent regulation will take time, and it is possible, but unlikely, that we will see clearly defined guardrails within the year, especially within the United States. Consequently, we are left to follow and predict how enforcement actions and pending legislation (in the U.S. and globally) will impact our operations, which carries with it the challenge of deciding how to allocate resources and assess risk in furtherance of our organizations’ missions despite this uncertainty.”
How can compliance become a competitive advantage?
“By nature, we learn from our mistakes and the actions of others. Investing in a robust, forward-thinking and adaptable compliance framework positions an organization to withstand sudden and potentially drastic changes in the compliance landscape. Establishing such an agile compliance posture further positions the organization to fill voids left in the wake of regulatory enforcement actions or to quickly adapt and present better, more secure alternatives to what presently exists.”
What is your advice to compliance professionals aspiring to move to leadership roles in the future?
“Build an extensive network of resources and develop collaborative relationships within your organization.
Whether you are at a young, maturing company or at an established global conglomerate, there will always be more evolution than existing resources can keep pace with. Developing trusted relationships with consultants, outside counsel, and vendors will enable you to be more agile in your response to the shifts in the regulatory environment. Within your organization, compliance only works if everyone buys into it. The company and its team members are more likely to embrace a culture of compliance if they view themselves as part of the process rather than having it imposed upon them.”