Crypto Regulation: Former U.S. Main Consumer Regulator Joins Crypto Risk Watch Firm

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WASHINGTON: Cryptocurrency startup Solidus Labs has hired the former director of the U.S. Consumer Financial Protection Bureau (CFPB) as its senior regulator, it told Reuters.

Kathy Kraninger is the latest former Trump administration official to land in the burgeoning digital currency industry as she strengthens her legal expertise and relationship with Washington amid increasing regulatory oversight.

Founded in 2017 by former Goldman Sachs employees, New York-based Solidus Labs provides tools for monitoring cryptocurrency transactions and tracking risk. Its funders include private equity firms Evolution Equity Partners and Hanaco Ventures.

Kraninger will lead and strengthen the regulatory team at Solidus Labs, spending most of her time working with US regulators, lawmakers and traditional institutions to explain how digital markets can be effectively vetted, she said in an interview.

Her career in government, including helping set up the Department of Homeland Security and leading the CFPB from 2018 to 2021, positions her to contribute to a growing debate in Washington on how to regulate cryptocurrencies, has she declared.

“Bringing in the expertise that I have of how federal regulators think, state regulators think… it just seemed like a fantastic adjustment,” Kraninger said.

Solidus Labs has created software to monitor crypto markets and help investment firms and other clients spot manipulation, bad actors, and meet compliance obligations. Its clients include the Bittrex crypto exchange and Rialto Markets.

The ability to monitor cryptocurrencies has become a major concern for regulators as the burgeoning market, which reached a record capitalization of $ 2,000 billion in April, experienced wild volatility.

In June, the Securities and Exchange Commission (SEC) again delayed the approval of a bitcoin exchange-traded fund and asked for comment on the risks of market manipulation.

This month, Senator Elizabeth Warren called for increased cryptocurrency oversight, while Treasury Secretary Janet Yellen told regulators they needed to quickly establish rules for digital coins linked to fiat currencies, known as stable coins.

Regulators fear the cryptocurrency market is volatile, opaque, and systemically risky.

“We have generated tremendous interest from regulators around the world,” said Solidus Labs Managing Director Asaf Meir. “We needed someone who brings the right experience.”

Crypto and fintech companies have taken over former Trump regulators. Former banking regulator Brian Brooks was appointed US CEO of Binance in May, while Chris Giancarlo, former chairman of the US derivatives regulator, is an investor in Solidus and founded the Digital Dollar Project which advocates for US policymakers are developing a digital dollar.

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