Binance and Coinbase Continue Hiring Former Regulators

Why These Hires are Bullish For Crypto In General

In the wake of Coinbase’s public listing last week, Binance has been quietly laying the groundwork to challenge Coinbase for its share of the market. Both companies have been seeking to position themselves for new possible market regulations, and have been adding financial experts and regulators to their staff. For example, Binance just announced the hiring of Brian Brooks – the acting head of the Office of the Comptroller of the Currency under the Trump Administration – to be the new Chief Executive of Binance.US. While he was in office, Brooks helped facilitate guidance that made it easier for banks to get involved in crypto, including allowing stable coin settlements and bank custody of crypto assets. 

If Mr. Brooks’ statements are an indication of regulators’ attitudes toward crypto assets, it’s an incredibly bullish sign for Bitcoin and cryptos in general. In Binance’s announcement of his hiring, Brooks said, “I am thrilled to be joining Binance.US at this pivotal time for the digital assets industry. We are at the cusp of mainstream adoption of blockchain technology and digital tokens by individuals, institutions, and governments alike…I am eager to work closely with industry participants and policymakers to develop an enduring regulatory framework that enables Americans to reap the benefits of decentralized finance for generations to come.” It certainly sounds like, in Brooks’ view, crypto is here to stay. 

Brooks isn’t the only former government official to be hired by Binance. In March, Binance announced the hiring of former U.S. Senator and ambassador to China Maxwell Baucus as its new government relations advisor. In his statement at the time of his hiring, Baucus said, “it’s a privilege to assist in appropriately navigating the complex political and regulatory frameworks that hold the key to enabling wider adoption.” 

Likewise, before its IPO, Coinbase hired Brett Redfearn – the SEC’s director of trading and markets – to run its capital markets group, including exchange operations and capital markets products. Redfearn will oversee Coinbase’s exchange operations, brokerage, and custody services. It’s clear from these hirings that both Binance and Coinbase are keen to add ex-regulators who will help navigate what could be a regulatory minefield. Their numerous connections in Washington will help both exchanges effectively lobby Congress and ensure that what regulation is in the pipeline will not stifle the blossoming crypto industry. 

These moves come as regulatory bodies like the SEC are learning the crypto language, making it all the more important for highly visible crypto organizations to be well connected. Gary Gensler, the new head of the SEC, is friendly toward crypto – with one former senior counsel at the SEC saying, “I think digital assets will be his legacy…He is going to focus on registration of exchanges, regulation, retail protection, and … root out fraud and manipulation.” While the benefits of retail protection are evident, it’s crucial that regulation is carefully crafted not to crush legitimate innovation. To that end, Coinbase recently established a new trade group called the Crypto Council for Innovation, with Fidelity, Square, and Paradigm as fellow members. The stated goal of this trade group is to influence policies that will expand the use of cryptocurrencies in traditional financial markets. 

It’s clear that while these moves will certainly help benefit Coinbase and Binance, these well-connected and knowledgeable representatives of the crypto industry will be a positive for the ecosystem as a whole. It’s crucial that crypto’s infamous reputation as a vehicle for crime and money laundering is invalidated, and these representatives play a key role in achieving positive outcomes for space. While Binance and Coinbase compete to out-maneuver one another and lobby for the industry, this “arms race” of lobbying will only accelerate these positive outcomes. 

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