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A little-known digital asset trading firm has appointed a legal veteran as its new head of compliance as it tries to navigate the vast, murky waters of U.S. cryptocurrency regulation, FOX Business reports.
Flowdesk, a four-year-old French startup that provides liquidity for some of Wall Street’s crypto ETFs, has brought on veteran securities lawyer James Morgan to join its executive team as it seeks to position the company as a major institutional investor in the U.S. crypto market.
“The United States is a strategically important market,” Flowdesk CEO Guillem Chaumont told FOX Business. “Developing a robust regulatory approach is a critical piece of the puzzle. Adding someone like James, who has nearly a decade of cryptocurrency regulatory experience, positions Flowdesk well to succeed and scale in the U.S.”
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Flowdesk has kept a relatively low profile since opening a U.S. office a year ago. But the company briefly gained attention in January when it raised a successful Series B funding round that included investors such as crypto payments company Ripple. That same month, Flowdesk quietly agreed to act as a liquidity provider for Grayscale, a crypto asset manager, when it launched one of 11 spot bitcoin ETFs alongside Wall Street giants BlackRock and Fidelity. It is doing the same for Grayscale’s Ethereum ETF, which began trading on Tuesday.
Morgan’s appointment, a 20-year legal career spanning both crypto and traditional finance, comes as the U.S. crypto industry is potentially teetering on the brink of new regulation ahead of the presidential election.
It also follows a trend of crypto companies adding “TradFi” (traditional finance) veterans to their executive ranks as the nascent industry seeks mainstream adoption and legitimacy: Flowdesk appointed TradFi-turned-crypto veteran Reid Werbitt as its U.S. CEO in September.
As U.S. regulators such as the Securities and Exchange Commission seek to bring cryptocurrencies under their jurisdiction, lawyers like Morgan, who have niche expertise in both digital and traditional securities law, are in high demand.
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“I’m excited to join the Flowdesk team at such a critical time for cryptocurrency,” Morgan said in an exclusive interview with FOX Business. “How the next administration approaches regulation will set the tone for years to come.”
Over the past three years, President Biden’s SEC Commissioner Gary Gensler has pursued sweeping regulatory overhauls of the $2 trillion cryptocurrency industry and filed enforcement actions against some of the industry’s largest players. Gensler says the cryptocurrency industry is rife with bad actors who violate securities laws by refusing to register with the SEC. The crypto industry says it’s not that simple, and the existing registration process doesn’t match the nuances of blockchain technology, leading to regulatory gridlock.
SEC Chairman Gary Gensler attends a meeting of the U.S. Treasury Department’s Financial Stability Oversight Council in Washington, DC on July 28, 2023. (Kevin Dietsch/Getty Images/Getty Images)
Meanwhile, Republican presidential candidate Donald Trump has rallied behind the crypto industry ahead of the November election, promising to ease regulations and put an end to what he calls “Biden’s crypto wars.”
Morgan is accustomed to dealing with financial regulators from both political parties: He has 10 years of experience working in compliance at the world’s largest stock exchanges, the New York Stock Exchange and the Miami Stock Exchange (based in New Jersey), and has regularly dealt with the SEC, the Commodity Futures Trading Commission and the Financial Industry Regulatory Authority.
He recently served as general counsel to digital asset trading firms FalconX and Genesis Global Trading, giving him a front-row seat to the shifting regulatory stance on digital assets.
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“The U.S. regulatory environment has been steadily evolving over the years,” Morgan said, “but while this evolution has sometimes been slow, it’s likely that the pace of regulatory change will rapidly accelerate in the near future, and we believe Flowdesk is prepared for this possibility.”
It’s no secret that cryptocurrency regulation has become a hot topic in politics this year, with Republican lawmakers, who have generally been more open to digital assets than their Democratic counterparts, pushing for legislation that would help provide clarity to the regulatory needs of cryptocurrencies.
Democrats now realize they are playing catch-up as Trump and his running mate, J.D. Vance, are appealing to a large segment of crypto supporters, many of whom identify as single-issue voters and will vote for the candidate most friendly to crypto, regardless of their other political views.
Republican presidential candidate and former President Donald Trump greets Republican vice presidential nominee Senator J.D. Vance during the second day of the Republican National Convention at Fiserv Forum in Milwaukee, Wisconsin, on July 16, 2024. (Photo by Leon Neal/Getty Images/Getty Images)
Following Biden’s announcement on Sunday that he will not seek reelection, the political ramifications for the crypto industry are unclearer than ever. Vice President Kamala Harris, the presumptive Democratic nominee, has not taken a clear stance on cryptocurrencies, and it is unclear whether Gensler would remain as SEC chair if elected.
Vice President Kamala Harris campaigned in Fayetteville, North Carolina on July 18, 2024. (Photo: Peter Zai/Anadolu via Getty Images/Getty Images)
Trump’s victory and Republican sweep of Congress could herald a new era of growth for crypto innovation in the United States, which would benefit Flowdesk and other companies looking to expand in the country.
