Crypto Layoffs Hit Risk and Compliance Staff at Big Exchanges

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Businesses including Coinbase and Gemini have cut employees and rescinded job offers, though recruiters say demand for legal and compliance talent in the industry continues, particularly among startups

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Although financial-services companies often cut compliance staff during economic downturns—because compliance is usually seen as a function associated with costs rather than revenue generation—compliance experts said reducing such staff at crypto companies could carry regulatory and reputational risks as the sector continues to face regulatory scrutiny in the US

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“Compliance specialists join a firm for salaries and titles and also for a good compliance culture,” said Will Brown, an executive search lead for financial services at Hamlyn Williams Inc., a global recruiter that focuses on regulated industries. “If [the firm] got a reputation that they decrease compliance staff when the market gets tough, you would worry about the longevity to join the compliance staff.” He added that can lead to more turnover in the compliance function.

Coinbase said in June that it would cut its workforce by 1,100 employees, or about 18%, saying it had grown too quickly and a potential recession “could lead to another crypto winter.” The company created a “talent hub” to help laid-off employees find new positions. Individuals who listed themselves on the hub included compliance analysts, paralegals for marketing, investigations analysts, financial-crimes-investigations analysts and a compliance and anti-money-laundering manager in India.

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The crypto exchange also rescinded several job offers, including for a know-your-customer onboarding associate and compliance associates, according to the talent hub.

“Coinbase will never compromise on its commitment to security and compliance and continues to hire for security and compliance roles around the world,” a spokesperson said in an email. The company expects to have about 5,000 full-time employees by the end of the second quarter, four times the roughly 1,250 workers it had at the end of 2020, the spokesperson said, declining to break out of the number of compliance staff.

Crypto exchange Gemini cut 10% of its staff in June, citing the effects of the market downturn. Its director of business operations and intelligence, who most recently was the deputy chief compliance officer, and its head of risk departed in recent months, according to people familiar with the matter.

Representatives for Gemini declined to comment. In a June blog post announcing the layoffs, Gemini’s founders, brothers Cameron and Tyler Winklevoss, said the job cuts were a response to a “contraction phase” in the crypto market and a decision to focus only on products that were absolutely critical.

The layoffs at the two exchanges are unlikely to significantly affect their compliance functions, industry observers said, as the companies built up these teams quickly and employees should be able to take on additional duties. “They can weather the shocks to a certain extent,” Mr. Brown said.

Despite the layoffs, recruiters said crypto companies’ demand for legal and compliance talent continues, particularly among startups, as these businesses navigate an evolving regulatory environment. In June, 261 crypto-related legal and compliance job ads were posted in the US, according to Google trends compiled for Businesshala by Cryptojobslist.com, a website focused on the blockchain industry.

The companies seeking compliance staff include crypto companies such as financial-technology firm MoonPay and FTX US, part of Bahamian crypto exchange FTX, as well as traditional financial institutions such as JPMorgan Chase & Co.

The ads are for all kinds of candidates, from entry level to executives. Crypto exchange Kraken had the highest number of open legal roles, with 31 new job postings between June 23 and June 30 and 112 legal roles posted in June overall, according to the data. The roles at Kraken include 24 mid-to-senior-level and seven director-level positions.

Although the crypto industry doesn’t face the same regulatory standards as traditional financial institutions, demand remains for building compliance capacity at these businesses, Mr. Brown said. “There is a lot of pressure on these companies,” he said. “Even in a downturn, you still need to hire—that won’t go away.”

Brian Burlant, a legal recruiter at executive search firm Major, Lindsey & Africa, said he sees the recent crypto layoffs as a correction for the nascent industry after a wave of hype caused investors to pump in money.

Mr. Burlant, who this year worked on the search for a general counsel for a crypto exchange and another for a Web3 fund, said compliance job candidates might think more carefully about the companies they choose, including by taking a closer look at their business models, he said.

“The smart companies are taking on the people with the best reputation; they have a distinct role to play, to help shape what this regulatory environment looks like in the years to come,” he said. “Regulators need that input from these people. [The companies] will not step aside; they would want the most important players on their team to have influence.”

Write to Mengqi Sun at [email protected]

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Credit: www.Businesshala.com /

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