We sat down with Richard Mico, the US CEO, US President, and Chief Legal Officer of Banxa to discuss regulation, investor confidence and more.
Can you tell us about your background in law and how you got into the crypto space?
Before joining Banxa, I spent 5 years working in private practices within the ‘Banking and Finance’ teams at large international law firms, and 10 years working in senior in-house roles across ‘Legal’ and ‘Risk’ at ASX, NYSE and LSE listed businesses specializing in payments, banking, finance, fintech and ‘buy now pay later’.
In my previous roles, I provided commercially focused legal, risk, regulatory and compliance-related advice on a multi-jurisdictional basis. I am proud, among other things, to have worked closely with regulators and industry to help launch a number of products globally including the world’s first-ever BNPL product on an open-looped digital card and Ireland’s first-ever BNPL product.
As a natural contrarian, I’ve always had a passion for the digital asset space and disruptive industries in general. Banxa proved to be a natural fit for me. After joining Banxa as the Chief Legal Officer in 2021, in 2022 I moved to Reno as the U.S. Chief Executive Officer to help establish Banxa’s U.S. footprint. It’s been an incredibly rewarding experience to play this role in the company’s growth.
The debate over regulation in the crypto industry has been a long-running one. While there have been growing calls for oversight of the industry, it still won’t happen overnight. How can crypto users and investors ensure their funds are protected as legislators and regulators around the globe work to establish clear regulatory frameworks?
Investors and individual users should remain vigilant against potential threats in the digital asset space. However, a clear regulatory framework with adequate investor protections will be an important step towards protecting users from unexpectedly losing access to their funds or other scams and, in turn, instilling further trust and credibility in this exponentially growing industry. In the absence of that regulation, choosing the right digital asset infrastructure is critical for platforms’ – and users’ – peace of mind.
It’s critical for Web 3.0 businesses to put in the work required to ensure compliance with local laws and regulations. While it is certainly a more demanding and time-intensive process, taking those steps – like securing money transmitter licenses and working proactively with local authorities – sets up payments infrastructure for success long-term. Banxa has seen a lot of success via this approach – acquiring licenses to operate in local markets as opposed to operating a purely reverse solicitation or straight-up non-compliant approach. This will be especially impactful as regulations continue to evolve over time on a national and international level.
What is your stance on crypto regulation? How can regulators – or the industry itself – improve from here?
I am a strong supporter and advocate for fit-for-purpose regulation which enables both innovation and consumer protection. I do not support regulation by way of enforcement, uninformed knee-jerk regulation, or regulation without appropriate industry consultation — which is equally unhelpful to industry and the broader public.
The US is by far the biggest digital asset market in the world and must take a leadership position in establishing (for the benefit of the world) clear and fit-for-purpose regulations and guidance around digital assets. The US has a very small window to act before this opportunity is lost — which would undoubtedly lead to a brain and investment drain in the US. Relevantly, after a few initial missteps and subsequent refinements, the EU via the ‘Market in Crypto-assets Regulation’ appears to be leading the charge.
Whilst there very recently appears to be some promising initial steps forward, unfortunately there largely seems to be a legislative vacuum in the US when it comes to digital assets. Many people in the industry want zero regulations, but I believe what is needed are well-informed policies that have both the industry and its users’ best interests in mind.
How do you predict the FTX saga will inform future regulations?
While the collapse of FTX appears to have stemmed from a lack of corporate controls and the decisions of bad actors, it also shed light on some of the fundamental flaws of the industry. I am cautiously optimistic that the tumultuous events of 2022 will provide the impetus for US regulatory bodies like the SEC and CFTC to finally collaborate with industry leaders to establish a clear and sustainable framework for the trading and custody of digital assets. Some degree of sensible and fit-for-purpose regulatory change is essential to rebuilding consumer trust and promoting greater transparency. Digital assets are here to stay, as the criminal undertakings of a few bad actors have little to do with the rest of the industry or the underlying productivity enhancements that are being ushered in with blockchain technology. In 2023 and beyond, exchanges and wallets will be reigned in to ensure a crime like this doesn’t happen again.
What do you think needs to be done to instill confidence in the industry and bring back both users and investor money?
Large capital from institutional investors is currently sitting still, as there is a lack of regulation and lack of goal posts. The US needs to be the leader here, creating policies that protect users and innovation. Because that hasn’t been done so far, there is a lack of investment in digital asset companies, a lack of regulation, and overall a lack on the policy movement. From a cybersecurity standpoint, there are a ton of hacks and bridge exploits occurring, which is also a huge problem that needs to be addressed before investor confidence is restored.
From an industry perspective, supporting common sense regulation — and working hand in hand with regulators to help shape the proper guardrails that foster innovation while protecting users — will be essential to setting the space up for future success.