Coinbase’s new chief compliance officer, Jeff Horowitz, just finished his first day on the job. The former managing director and chief compliance officer of BNY Mellon subsidiary Pershing, LLC., spent the day in meetings, and going through an onboarding process he likens to a mix of Silicon Valley and Wall Street.
With the formalities mostly out of the way, Horowitz, who has spent much of his career managing brokerage custody and clearing and settlement solutions is setting his sights on the future. Especially as relates to two of Coinbase’s latest pushes into enterprise cryptocurrency solutions.
Earlier this month, the 12th-largest exchange in the world, with $156 million daily volume in bitcoin, ethereum, bitcoin cash and litecoin transactions, opened Coinbase Custody, which aims to make it more appetizing for traditional hedge funds to diversify their portfolios with cryptocurrency; last month Coinbase bought a licensed broker-dealer.
These actions, along with the Horowitz hire, show how serious Coinbase is about institutional cryptocurrency adoption, in spite of regulatory hurdles.
“For the past two decades, I’ve built global AML and fraud-prevention programs for companies like Citigroup, Goldman Sachs and Salomon Brothers,” Horowitz told Forbes. “These are precisely the type of programs that institutional investors need to see as they’re starting to see crypto as an investment opportunity.”
Most recently, Horowitz worked as Pershing’s managing director and global head of compliance, where he oversaw the global financial solutions company’s regulatory and compliance programs. Before that he helped manage the company’s anti-money-laundering (AML) and compliance programs as the firm’s chief compliance officer.
But as Horowitz works to help make cryptocurrency more appetizing to risk-averse institutional investors, it’s perhaps his regulatory experience, working with the Federal Deposit Insurance Corporation (FDIC), and two terms serving as a member of FinCEN’s Bank Secrecy Act Advisory Group that makes him most attractive to the cryptocurrency exchange. Currently, he serves on committees for the Security Industry and Financial Markets Association’s (SIFMA) compliance and regulatory policy, and the Financial Industry Regulatory Authority’s (FINRA) compliance and advisory.
As a result of Horowitz’s hire, Coinbase’s chief legal and risk officer, Mike Lempres is expected to more exclusively focus on the cryptocurrency exchange’s government relations efforts.
The hire from BNY Mellon’s Pershing, which has $1.8 trillion assets under management, comes at a time when the cryptocurrency space faces a dearth of custody platforms. In spite of the increased institutional demand for cryptocurrency investment opportunities, even the most progressive enterprise trusts have proved unwilling to physically custody the assets.
Among the few startups providing cryptocurrency custodian services is New York-based ItBit, which received the first cryptocurrency charter granted by the New York Department of Financial services back in October 2015 and last month received expanded permission to custody ethereum, litcoin, bitcoin cash, and lumens. Nevada-based Prime Trust recently announced its own cryptocurrency efforts, and serves as a qualified custodian dealing with cash stocks, bonds, cryptocurrencies and real estate
As Horowitz starts his second day on the job in this increasingly competitive space, he says his top priorities are to add new supervisory controls for the custody services and to make sure Coinbase’s broker-dealer services are in compliance with current regulations.
“It’s my job to guide the company as it takes the next steps on this journey,” he said.