Kristin Boggiano, lawyer and co-founder of the CrossTower Digital Asset Exchange, developed her ethos of protecting vulnerable people working and living in the Amazon in the 1980s and helped fight for the rights of the Cofán against the big oil companies.
She later worked on mortgage-based derivatives on Wall Street just before exotic derivatives assumed part of the blame for sparking the global financial crisis (GFC). As a result, she used her insider knowledge as a lawyer to help shape market reforms.
This is partly thanks to the GFC that institutes were slow to adopt Bitcoin in the early 2010s, she says.
“I came across it [Bitcoin] from a lawyer’s point of view because my clients wanted to buy it and act. I had to find out what it was and how to trade it, ”she recalls, looking back on the beginnings of the crypto markets between 2011 and 2013.
Back then, their clients weren’t ideological – they were institutions that saw opportunities in arbitrage. “They had no philosophical desire to change the world with Bitcoin. They saw it as an asset class back in 2011 and 2012. “One of those customers was Western Union, a financial services company that she represented.
But Bitcoin soon found itself with the breakdown of its primary exchange, Mt. Gox, and the widely publicized arrest of Ross Ulbricht, who ran the Silk Road darknet market.
“As soon as the silk road is passed and the mountain. Gox, I think institutional participation has become questionable from a fiduciary standpoint. You don’t want to participate in illegal activities. “
Seven or eight years later, the institutions are fully back. Boggiano views proper regulation in the name of security and legality as critical to integrating the crypto industry into their respective powers. Just as the Cofán in the Amazon needed environmental regulations to keep their land free from oil spill, she believes retailers also need strict regulations to protect them from financial harm.
@ crosstower_ex Co-Founder and CEO of @KristinBoggiano meets with @JillMalandrino on @Nasdaq #TradeTalks to discuss institutional adoption of digital assets, structured products and regulations. https://t.co/nDJXPaS6BM
– TradeTalks (@TradeTalks) January 14, 2021
Apart from the fact that he is the president of the institutionally oriented platform CrossTowerBoggiano is also the founder and co-chair of the Digital Asset Regulatory & Legal Alliancewhose “approximately 90 members are executives, senior legal and compliance officers from financial institutions and blockchain technology companies”.
She previously served as both Chief Strategy Adviser and Senior Regulatory Counsel at Guggenheim Partners, an investment firm with $ 270 billion in assets under management. The firm recently received press for its chief investment officer, Scott Minerd. Bitcoin’s prediction will reach $ 600,000.
Sounds a bit derived
With her father as a doctor in the Air Force, Boggiano grew up on the move. “I lived in Texas, California, Taiwan, New Mexico, New Jersey, Colorado and back to New Jersey,” she says. When her parents divorced, she lived with each of them until she began studying economics at Sarah Lawrence College in 1992.
After writing a thesis on Texaco’s work in Ecuador and the detrimental human rights and environmental impacts of US foreign policy on developing countries, she received a scholarship to travel to Ecuador, where she worked for a law firm promoting the rights of indigenous peoples.
“I found the Cofán in the upper Amazon basin and then lived with them for a while to help them think about how to get the title for their land.” The difficulty was that the Ecuadorian government owned rights to the underlying oil it wanted to extract – with US oil companies often assisting with the drilling.
After two years of fighting for aboriginal rights, Boggiano was inspired to apply to law school. She graduated from Northeastern University School of Law in Massachusetts in 1997 and received an MBA from the same institution in 1996.
“During my studies, I was fascinated by the derivatives markets.”
During her studies, she first worked in the enforcement departments of the Commodity Futures Trading Commission and the Securities and Exchange Commission in New York in 1995, both of which were charged with regulating the US financial system.
She soon got a job for Merrill Lynch in the late 1990s, trading or structuring equity and credit derivatives for hedge funds and high net worth individuals.
“I worked 18 hours a day, sometimes seven days a week – it was just a really crazy market. [Chair of the U.S. Federal Reserve Alan] Greenspan kept interest rates very low, and people were really looking for returns at the time. That is why they have developed creative methods of making products. “
“I think 81 was the first swap,” Boggiano tells the magazine of the early history of derivatives before it came into play. It refers to financial swaps, which are derivative contracts that allow parties to trade the cash flow of one asset for another. These exploded in popularity as investors sought return after lowering bank rates.
“Foreign exchange derivatives were in the early 1990s,” she calculates, adding that equity derivatives began around 1996. “But they were just getting started and republished the definitions in 2002.” The young Boggiano found himself in the middle of a financial revolution of the time on the trading center.
It all sounds familiar to me
In many ways, Boggiano’s description of the Wall Street world of the 1990s and early 2000s invites comparisons to the more recent DeFi (decentralized finance) boom in the cryptocurrency world. Cryptocurrencies like Bitcoin didn’t initially offer opportunities for cash flow beyond appreciation, but that changes with things like Ethereum 2.0 offers wagering rewards of several percent per year.
Today, many lenders such as BlockFi and Celsius, as well as various exchanges including Boggiano’s CrossTower, offer the opportunity to generate interest income on cryptocurrency holdings. In addition, DeFi platforms such as SushiSwap from Ethereum and PancakeSwap from Binance Smart Chain enable the exchange of cryptocurrencies using liquidity pools. These pools of liquidity act as decentralized cash reserves that anyone can contribute, with those contributors then generating returns in the form of trading fees.
DeFi’s concept has been dubbed “Financial Lego” and goes much deeper. The tokens that represent shares in these liquidity pools can even be deployed on other platforms (or vehicles, as they were called in Boggiano’s early days) to enable income farming, often with tokens being generated in new projects that are immediate or via can be vested for several years.
Just like the 18-hour days Boggiano recounts, there is no shortage of “DeFi-Degens” skipping sleep to manage their yield farms on a variety of emerging platforms. FTX’s Sam Bankman-Fried spends almost every waking moment at his desk in Hong Kong, sleeping on an office beanbag.
In 2000, Boggiano left the office to work in a law firm developing new products for the new financial ecosystem. “It was a wild market. I did credit default swaps on residential mortgage-backed securities and then put those in other vehicles, ”she explains.
In 2007 and 2008 the global financial crisis decimated the market.
“After the market collapsed, I became a lawyer and helped shape the rules of Pre-Dodd-Frank [Wall Street Reform and Consumer Protection Act]Boggiano tells of the turbulent times when she worked to create stability through regulation and control.
It may not be fair to blame Wall Street innovators for greed. Finally, despite a difficult economic environment where previously high interest rates had fallen, investors were demanding returns on their capital. You can no longer deposit your money in a bank account and watch it grow so constantly. With the idea that money should be earning cheap interest rates firmly entrenched across generations, the creation of exotic new ways to accomplish this seems inevitable.
Bitcoin from the ashes
In the aftermath of that crisis, many began to question the stability and even legitimacy of the financial system, which was largely centered on Wall Street.
What made this early derivatives market more serious than an anonymous online DeFi casino was that the money that flowed through it was not the gambling budget of self-styled “degens” who “mimicked” new return strategies without critical analysis. Instead, money often represented the savings and mortgages of the average person.
Who better to act as a regulator than someone who has a thorough understanding of this crucial area? That person was Boggiano, who withdrew from the chaos of the trading floor to a law firm where she worked to rebuild the system in the hopes that it could regain people’s trust.
In this position as a lawyer, Boggiano came across Bitcoin in 2011. Big financial institutions she worked with were interested, but they were skittish.
The level of control was very high at the time, not least because the Bernie Madoff Ponzi program had recently come to light and the industry was undergoing regulatory change, explains Boggiano.
It’s different today.
“We are undoubtedly seeing the participation and acceptance of Bitcoin from an institutional point of view,” explains Boggiano, listing Elon Musk, MicroStrategy, Visa and Mastercard as well as the endowment funds of large institutions such as Harvard, Stanford and Yale as on recently converted supporters. There is even interest at various national levels, such as China and the United States, which are working on a digital yuan and dollar, respectively.
“I think there is a natural, healthy competition that Bitcoin has on monetary policy in the US and elsewhere. This competition is a good thing because it forces countries to think about their economies.”
“We’re going to see significant adoption and change in the next three to five years – it’s going to be a different economy,” she says with full confidence.
One question that arises is whether some institutions feel they have missed the crypto boom as they were often prevented from taking steps in the early years due to the uncertainty that went with it. Boggiano sees this not as a missed opportunity but as an appropriate exercise of caution. “I think they are doing the prudent analysis that they need to do to protect their investors. I think you have seen more activity from props that don’t need to report to investors,” she says.
“I think the narrative about the institutions is that with sufficient acceptance [when] The number of Bitcoin wallets in use is considerable. They are much less likely to just go to zero. “
According to Boggiano, protecting private investors who gamble alongside the institutions is important. “We have a very outdated financial system and a very outdated regulatory process. I think there is a natural battle between innovation and trying to protect retailers.”
Any investment offered to retail is scrutinized more closely than those that only discerning investors such as institutions and high net worth individuals can participate in, as the latter companies are believed to be better able to understand the investments and manage losses . “These protective measures are in place so that there is no fraud or manipulation.”
However, Boggiano admits, “It is primarily a retail-focused asset class that is very unusual. Most of the asset classes are managed by institutions.”
More regulation, less privacy?
“With regard to Bitcoin, I see a moral obligation to develop a means to promote privacy but ensure security,” says Boggiano. While she values privacy, she considers protecting retail investors and the wider population a higher priority.
An example of this was the Capitol riot in which investigators located Nick Fuentes receive 13.5 Bitcoin from a foreign donor. According to Boggiano, this was a great demonstration of decanonymizing Bitcoin transactions by following “digital breadcrumbs” in the name of public safety.
Coinbase is a company that aims to help authorities follow these digital breadcrumbs Providing crypto surveillance services to US government agencies like the Drug Enforcement Administration and the Internal Revenue Service.
“We really need to develop an alternative means of protecting people’s privacy, but also be able to track down human trafficking and drug cartel-related transactions as these are not acceptable industries.”
Boggiano is in a way the mirror image of Erik Voorhees, a former Journeys interviewee and co-entrepreneur of Bitcoin, who also runs an exchange platform. who said “Institutions and government exist only to limit people’s power over money.”
While Voorhees’ viewpoint reflects an individualistic ethos of unbridled freedom, in which collectivist institutions constrain the powerful and ambitious, Boggiano instead describes governments and regulations as necessary to protect the vulnerable, like the Cofán in the Amazon who needed environmental regulations to free their lands to keep waste of oil.
“If you are left to your own devices, you get these power imbalances, and that can be very destructive to people in vulnerable positions,” she explains.