In-house counsel and FinTech projects in the crypto world: A conversation with Flexa’s General Counsel Michelle Gitlitz
Chambers FinTech spoke with a leading legal professional to discuss why attorneys were moving to in-house roles within FinTech.
The movement to in-house positions for attorneys
A key trend in the FinTech market over recent years has been attorneys moving out of private practice into in-house roles at FinTech companies, particularly payments networks and cryptocurrency firms.
One such attorney is New York-based Michelle Gitlitz, General Counsel at digital payments network Flexa, who I recently had the opportunity to speak with.
Michelle has been in the cryptocurrency space since 2015, overseeing a variety of transactions whilst in private practice. She moved in-house to Flexa in September. Comparing some of the key differences between her previous position in private practice and her current in-house role, Michelle says: "My job is more product-driven now." She explains: "We use different types of integrations for different types of clients. One recent success is helping a large bank in El Salvador comply with the Bitcoin law."
Bitcoin becomes a legal tender in El Salvador
Flexa recently made headlines when El Salvador became the first country to make Bitcoin a national currency. The company played a key role in helping merchants to be compliant with new El Salvador legal regulations and has helped with building wallet and payments infrastructure.
On the longer-term issues that in-house counsel in the crypto space should be thinking about, Michelle mentions the critical issue of stablecoin's, a type of cryptocurrency that is pegged to an outside asset such as the U.S. dollar, saying: "The biggest thing I think we've seen frankly since I've left private practice is this focus on stablecoins. What is a stablecoin? How should a stablecoin be regulated? What is a stablecoin's use in payments? This is obviously hugely relevant to us."
Regulation is crucial to the future of services offered by digital payments companies like Flexa, and to their clients. Earlier this year, the Office of the Comptroller of the Currency, which regulates and charters national banks and federal savings associations in the U.S., gave conditional approval for crypto firms Paxos, Protego Trust and Anchorage to become national trust bank charters.
How do financial institutions regulate cryptocurrency?
One of the key services offered by crypto firms like Paxos is the custody and management of USD stablecoin reserves.
Michelle explains that "regulation is good" for the crypto industry, before continuing: "Regulation means that the government accepts the legitimacy of the asset class and sees the value in the asset class. I'm not sure if my opinion is universally accepted, but we at least think that it's a positive. It's a step in a positive direction."
Leading cryptocurrency businesses prioritise compliance with regulatory obligations, and thus require a solid legal footing to develop their services. In the U.S., it is still not clear how different federal and state regulators will choose to innovate in their oversight of cryptocurrency activities, but the opportunity to add value in this space as an in-house attorney is significant as the FinTech industry continues to evolve.
Chambers coverage of the cryptocurrency market
Chambers conducts in-depth interviews with a range of industry experts that offer strategic regulatory advice and transactional counselling to innovative start-ups and incumbent financial institutions engaged in cryptocurrency activities. These activities involve issues concerning digital asset trading and custody, money transmission, securities and commodities law, as well as corporate and commercial transactions.