Silvergate drives demand for crypto compliance

TL;DR Breakdown

• European financial firms catering to crypto companies are vying for top compliance staff following the collapse of US heavyweights Silvergate Capital Corp and Signature Bank.
• This surge in demand is fuelled by the need to ensure new clients meet anti-money laundering and regulatory standards.

In the wake of Silvergate Capital Corp’s and Signature Bank’s downfall, Europe’s financial institutions catering to cryptocurrency ventures are racing to bolster their compliance teams.

With a surge in demand for top-notch compliance staff, these firms are striving to meet the stringent anti-money laundering and regulatory benchmarks that come with the influx of new clientele.

Rising premium on compliance expertise

The cryptocurrency industry, notorious for its lackluster corporate governance and a slew of bankruptcies, has grabbed the attention of regulators.

The recent developments have led to a bidding war for the limited number of specialists equipped with both cryptocurrency knowledge and regulatory compliance skills.

“Compliance expertise is not a commodity you can easily come by, especially in a unique field like crypto. Hence, it now comes with a significant premium,” remarked Natasha Powell, BCB’s chief compliance officer.

London-based BCB, a leading payment service provider, has seen a twofold surge in inquiries from potential clients since February. The firm aims to expand its client onboarding compliance team by 50% over the next five months, signaling the criticality of compliance checks to its operation.

Soon, BCB plans to step into the void left by the discontinued Signet and Sen services, previously run by Silvergate and Signature, with the launch of its BLINC instant payment service in the US.

A compliance specialist newly onboarded for account opening can expect to earn between £55,000 and £75,000 annually in the UK, marking a 10%-20% pay rise compared to pre-crypto slump rates.

Traditional lenders have long maintained a safe distance from cryptocurrencies, wary of its stained reputation and regulatory scrutiny.

However, a network of small-scale payment and financial intermediaries has emerged, providing a suite of services ranging from operational accounts to enabling fiat-to-crypto conversions.

Fiat Republic, co-founded by Sophie Guibaud and based in London, is one such firm that enables crypto businesses to avail corporate banking services and accept fiat currency payments from their users.

Guibaud emphasized the importance of a hybrid skill set, “Our aim is to hire sales and compliance personnel who are well-versed with both payment and crypto operations. We cater to crypto platforms with specific operational needs and risks, hence this duality in understanding is essential.”

Expansion and recruitment in the face of growing demand

Silvergate’s legacy is impacting financial firms across the continent. Lithuania’s Blockbank has reported a spike in inquiries from potential clients, prompting a hiring spree for analytics and anti-money laundering experts.

Anastasija Plotnikova, Blockbank’s CEO, underscored the intricate nature of compliance, saying it involves more than just routine document verification.

Meanwhile, UK’s digital merchant banking provider, Greengage, brought onboard ex-Binance executive and UK regulator, Lynn McConnell, to lead its compliance department.

Greengage’s expansion plans reflect its CEO, Sean Kiernan’s recognition of the importance of understanding both traditional regulations and the unique risks associated with the crypto exchange market.

The increasing need for compliance experts has also given rise to more flexible hiring strategies, with some firms turning to contractors. Some firms are even considering poaching from the traditional financial sector.

Yet, this has become increasingly challenging as recent collapses and scandals in the crypto sector have made the switch less attractive to some candidates.

Denis Spearman of recruitment firm Danos Associates points out a clear trend, “There’s a tremendous demand for compliance officers in Europe. Foreign companies are looking to set up a base in the EU to leverage the new, comprehensive set of crypto regulations.”

In essence, Silvergate’s collapse has sparked a compliance-focused hiring spree in Europe’s crypto-friendly financial firms. The combined pressure of regulatory scrutiny, rising demand, and sector-specific risks has led these firms to prioritize compliance expertise like never before.

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