Leading cryptocurrency trading platform Coinbase is beefing up
its compliance team as part of an effort to legitimize the asset
class in the eyes of cautious regulators and institutional
investors.
The San Francisco-based start-up announced Tuesday it will hire
Jeff Horowitz as its first-ever chief compliance officer. Horowitz
was managing director and global head of compliance at Pershing, a
subsidiary of BNY Mellon specializing in brokerage custody,
clearing and settlement.
"As Coinbase — along with the cryptocurrency space as a whole —
grows and matures, continued regulatory compliance across all the
varying jurisdictions globally will be critical," Coinbase
President and Chief Operating Officer Asiff Hirji said in a blog
post Tuesday. "Adding Jeff to our team is one more important step
along this journey."
Before Pershing, Horowitz led compliance and anti-money
laundering programs at Citigroup, Goldman Sachs, and Salomon
Brothers, and was a banking regulator with the Federal Deposit
Insurance Corporation.
As one of the biggest digital currency platforms, Coinbase was
in the right place at the right time as the price of bitcoin skyrocketed to almost $20,000, mostly
from retail investors, in 2017. Since then, bitcoin is down more
than 60 percent, according to data from industry site CoinDesk.
Despite the crypto bear market, Coinbase has been reinvesting
its gains in everything from institutional investor products, to acquisitions, including a fully
licensed broker-dealer.
Risk-averse institutional investors have been especially
wary of potential hazards that
come with cryptocurrency. Bitcoin has nosedived roughly 50 percent
this year after regulatory crackdowns on fundraising frauds,
high-profile hacks and a lack of new buyers.
U.S. regulators have been equally cautious about the risks. The
U.S. Securities and Exchange Commission has cracked down on fraud
in initial coin offerings, and recently declined to approve what would
have been the first-ever bitcoin ETF, highlighting issues of market
manipulation and investor protection.
Coinbase has also poached key executives from LinkedIn,
Twitter, Facebook and the New York Stock Exchange this year.
The company landed at the No. 10 spot on the 2018 CNBC
Disruptor 50 list, and reportedly valued itself at about $8 billion
when it set out to buy Earn.com, according to Recode. That was much higher
than a valuation of $1.6 billion at its last round of venture
capital financing in summer 2017.