Cryptocurrency regulation reads more like a film script than the traditionally dull and stodgy world of financial rulemaking. 

Just look at the hot water Binance appears to be in now, with regulatory authorities from the U.K., Japan and Germany, to name a few, calling foul against the exchange.

More broadly, the Financial Action Task Force (FATF), a global anti-money laundering (AML) watchdog, is reviewing the crypto industry annually. But the sector is moving so fast that FATF guidance teams are left scratching their heads, wondering how to deal with things like decentralized finance (DeFi).

For now, the regulatory focus is mainly directed at crypto’s third-party intermediaries, the exchanges, trading desks and custodians. When it comes to this arena of virtual asset service providers (VASPs), Jeff Horowitz, chief compliance officer at BitGo, a digital assets custodian,, understands where regulatory tensions and fault lines lie. Prior to joining BitGo in October, Horowitz spent two years steering compliance efforts at Coinbase, the now-publicly listed crypto exchange. 

Asked his opinion on Binance, Horowitz said Binance.US – the arm of the Binance business serving American customers and complying with U.S. regulations – made a “smart move” when it hired former U.S. banking supervisor Brian Brooks. (Brooks previously served as U.S. acting comptroller of the currency, and prior to that worked alongside Horowitz as Coinbase’s chief legal officer.)

“If there’s anybody who can balance being regulated and growing a business, I think Brian will be able to pull it off,” Horowitz said in an interview. “From what I know, Binance.US and Binance.com are two very separate companies. I think embracing regulation is the only path to go for the long run.”

Binance is said to be looking to hire an ex-regulator or government figure like Brooks for the U.K., where a satellite company owned by Binance attempted to become regulated, but was later slapped down by the Financial Conduct Authority (FCA). A Binance spokesperson described the situation as a “misunderstanding” with the FCA.

Coinbase, in the Form S-1 it filed when going public, made mention of Binance’s lack of regulatory compliance as potentially giving it an unfair competitive advantage. 

“Coinbase and other entities long ago made a decision to play the long game and go the regulated route. And there is a cost to doing that,” Horowitz said, adding:

Preventing regulatory arbitrage, when the rules are still only half-baked, is the challenge being addressed by the FATF, which has made the recommendation that firms like BitGo and Coinbase share customer identification data along with cryptocurrency transactions over a certain amount, known colloquially as the “travel rule.”

Aside from devising a technical travel rule system everyone is happy with, there’s obvious concern among large established businesses when it comes to sharing sensitive customer information with lesser known third parties. That has led to a piecemeal approach, where firms in more buttoned-up jurisdictions like the U.S., Switzerland and Singapore are rolling out products for registered crypto firms in those regions.

In terms of those sorts of products, Horowitz is proud to have been the initial driving force behind the U.S. Travel Rule Working Group (USTRWG), which he originated when he was at Coinbase. 

“The reality is there are multiple solutions being built and at some point they’ll need to be interoperable. But we were feeling the regulatory pressure to start building,” he said. 

The 30-plus member USTRWG includes a core membership composed of firms like Coinbase, BitGo, Gemini, Fidelity Digital Assets, Paxos and Kraken. No mean feat then to get these bare-knuckle crypto competitors round the table to collaborate.

“I come from traditional finance, where legal and compliance would collaborate and put competition aside for the right thing for the industry,” Horowitz said. “And we just partnered, and I’m pretty proud of that.”