Last month, Shahla Ali stepped into the role of chief legal officer and chief compliance officer at BitGo, a blockchain software company that secures digital currency for institutional investors. As a newcomer, she has found the industry’s relationship with regulators to be similar to some of her past jobs in an industry that’s quite different from crypto.
Ali, who serves as BitGo’s first in-house lawyer, wasn’t a cryptocurrency expert or enthusiast before joining the Palo Alto-based company, so she’s still up against a pretty steep learning curve, she toldThe Recorder affiliate Corporate Counsel in a phone interview last week.
Before BitGo, Ali worked in financial services with Carlson Capital, an alternative asset management firm, for about seven years. Before that she was at global investment management firm Millennium Management. At both firms, she served in senior legal and compliance roles.
In a blog post announcing the hire last month, BitGo CEO and co-founder Mike Belshe wrote Ali was selected “as part of the company’s focus on regulation.”
“Shahla will work closely with the BitGo executive management team to help ready and position BitGo to serve institutional clients,” Belshe wrote, adding that she “will be critical in facilitating BitGo to leverage its technology platform in conjunction with appropriate regulatory licensing to access and offer additional services.”
Ali also spoke all about her first weeks at the company and how the way regulators see cryptocurrency today reminds her of past regulatory attitudes towards hedge funds. This conversation has been edited for clarity and length.
Corporate Counsel: What has your first month at BitGo been like?
Shahla Ali: It’s been very different. I’d been focusing on asset management and hedge funds in previous roles. I decided I want to try something different. I resigned from Carlson [in April 2017] and continued to consult with them through the end of the year.
I wanted to use my law degree in addition to regulatory experience and have more GC-type of work. I thought this was a perfect fit. Cryptocurrency was not something I was very focused on, but I do think that blockchain technology is the future.
So what attracted you to the fintech and crypto space?
I began to think of the regulatory aspect and what could happen with bitcoin. I had a brainstorm and thought about where this is going. It became clear to me that I see it will be in a regulated environment. It reminds me of back in 2003, 2004, 2005 when people didn’t know a lot about hedge funds. People didn’t know what to do with this sort of new area of finance. The SEC was trying to figure out how to address them and now, the investment advisers are registered advisers in a highly regulated environment.
In the cryptocurrency space, that’s happening right now. I’m uniquely positioned and have the opportunity to get in on the ground floor and perhaps help write the law. I’m really excited about it.
Which regulators has or will BitGo be looking to for oversight?
BitGo is involved in Japan, the U.K., Singapore and will have to be compliant in all of these places. But in the U.S., it’s the SEC. It’s also state banking regulators because of the charter [associated with BitGo’s acquisition of bitcoin custodian Kingdom Trust, announced in January.]
We’ll deal with the New York State Department of Financial Services to obtain a BitLicense to transact crypto in the U.S. [We'll work] potentially with the CFTC, depending which way it goes. My opinion is that it will become streamlined so they will say, “OK, this looks like a commodity, go to the CFTC and this looks like a security, go to the SEC.”
We are looking at a fintech license in Europe. Some countries are friendly, some are not. I was in Frankfurt a couple of weeks ago and saw a bitcoin ATM at the Frankfurt airport. Governments can be reluctant, but a millennial is not OK having to wait until Monday morning to transfer funds, and that’s where this is going. You can never put the technology back in the box, but we will see it become more institutionalized and more regulated.
What will it take to change the perception of the cryptocurrency markets?
When hedge funds became more popular, people thought they were all evil. To some extent, some people do now, but more people understand it’s a true financial player in the market. We have to continue to educate regulators that it is something that has intrinsic value.