Compliance officers wary of switch to ‘Wild West’ crypto sector
NEW YORK/LONDON: After almost three decades in senior compliance roles at large financial firms including Bank of New York Mellon’s Pershing and Goldman Sachs Group Inc, Jeff Horowitz made an unconventional career move.
In July he became chief compliance officer at cryptocurrency exchange Coinbase, taking a leap into the more lightly regulated world of digital assets.
“It’s not for the faint of heart,” Horowitz said of the move from compliance on Wall Street to a cryptocurrency startup.
“You need to have a flexible risk needle. The old school attitude of compliance being Doctor No really doesn’t translate well to this industry.”
Horowitz is one of several senior compliance officers hired by cryptocurrency firms over the past year in a recruitment spree aimed at helping them cope with increased regulatory scrutiny and becoming more palatable to mainstream investors.
The companies are especially keen to poach executives like Horowitz who have spent years in the legal and compliance divisions of large banks and law firms.
But convincing them is not easy, say headhunters and recent hires.
They tend to be risk averse and could be put off by the industry’s libertarian founding ethos which can mean hostility towards government regulators.
Digital currency trading has also faced a year-long slump in volumes, making it harder for firms to attract candidates with promises of crypto riches.
Annual salaries for senior positions in London are around 120,000 pounds (US$158,000) or more and in the United States around US$300,000 or higher for larger companies, recruiters said.
As these salaries are in line with the mainstream financial industry, recruiters pitch the chance to work in a fast-moving and emerging industry.
“The best chief compliance officers have successfully mitigated risk for a living, and they tend to be relatively riskaverse when thinking about their careers,” said Scott Fletcher, a founder at fintech C-suite recruitment firm Intersection Growth Partners.
“To find a person who has the skill set and is also willing to take the risk to join a cryptocurrency firm, it’s tough.”
Carrying out checks on new clients, fielding requests for information from law enforcement, and figuring out what laws may apply to new financial assets – often across jurisdictions – are among the jobs that can be more challenging in a crypto firm.
“On-boarding a new client you need to undertake careful due diligence,” said Charles Beach of Lendingblock, a London-based securities lending platform for cryptocurrencies.
“But you might not obtain the same level of assurance from a firm in the still very new crypto industry as you would from a mainstream financial firm.”
He previously worked in senior risk positions at trading firm IG Group, UBS and PwC.
The crypto industry has been peppered by scandals including hacks, technology failings and alleged use of virtual coins for money laundering and on illegal online marketplaces. — Reuters