Crypto is seeing an increase in accountants and lawyers
Michel Euler—POOL/AFP/Getty Images
What would Satoshi have to say about all this? The hottest crypto area right now is compliance – a field dedicated to helping companies meticulously comply with thousands of rules and regulations created by bureaucrats and banking regulators. It is certain that Bitcoin’s creator – who saw his invention as a means of escaping the power of governments – would not be impressed. But here we are.
This week, Fortune reported on two compliance-focused crypto startups: Violet, which raised $15 million to expand its offerings based on its commitment to enforcing know-your-customer laws, and Toku, which has been fine-tuning laws for over 100 country to help companies track the tax obligations of staff compensated in crypto. These are just the latest entrants to a thriving cottage industry of lawyers, accountants and consultants making their fortunes advising crypto firms on how to avoid stepping on regulatory landmines.
I don’t blame suit-and-tie professionals—many of whom are highly skilled—from flocking to the crypto industry. If you could give yourself a huge pay gap by joining a busy new sector, wouldn’t you jump at the chance? Still, it’s hard not to have mixed feelings about the mad rush for compliance services.
This is partly because it shows how so much of the wild, outlaw energy that defined early crypto is gone for good. The previous era produced a wealth of colorful (and often shady) characters that helped create crypto’s vibrant meme culture, and a group of revolutionaries who believed that using a third-party wallet to hold your assets was an act of selling out . There was a time when the best way to get hold of Bitcoin was to buy it on the street.
But my concern about the rise of the crypto-compliance industry isn’t just rooted in nostalgia. There’s also the fact that top-notch lawyers and accountants are extremely expensive, and crypto companies have to pay for them by diverting large chunks of their budget that once went into building blockchains. The new compliance regime means crypto will have to deal with huge transaction costs like those weighing on the cannabis industry. In both cases – crypto and cannabis – the costs are the result of bad government policy, but they must be paid nonetheless.
On the bright side, the swarms of lawyers and accountants reflect how crypto has grown in wealth and importance, showing more than ever that the industry is here to stay. And for the shrinking number of old-school crypto followers, it’s still possible—if you really want to—to trade blockchain assets on your own, without anyone watching over your shoulder. It is certain that this is how Satoshi still does it.
Jeff John Roberts
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@jeffjohnroberts
DECENTRALIZED NEWS
Silvergate, the longtime banker to many crypto companies, said Wednesday that it would cease operations and undergo voluntary liquidation, but that all deposits would be returned in full. (Fortune)
Stripe raised a whopping $6 billion at a lower valuation than previous funding rounds, and intends to use the money to pay taxes and conduct a tender round for employee stock options. (Eric Nykommer)
JPMorgan will stop offering banking services to The twins, according to an unnamed source. (CoinDesk)
Veterans from Jane Street and Pimco raised $16 million for their startup Proven, which helps businesses integrate the privacy and security feature known as zero-knowledge secure. (Fortune)
Coin base launched a SaaS program called wallet-as-a-service that will allow Web 2.0 developers to more easily integrate Web3 wallet functionality into their existing products through APIs. (TechCrunch)
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