It's not just crypto. The entire fintech space has an ideology that lines up far better with Silicon Valley than with Wall Street. The Wall Street mentality would dictate a very different course of action than the Silicon Valley mentality in many of the situations described in the cases brought by the DoJ and the SEC, and yet the Silicon Valley mentality seems to have been the guideline used by SBF/FTX -- perhaps because of a lack of experience dealing with customer funds, or perhaps due to ignorance of the seriousness of consequences.
Edge cases matter a lot more to Wall Street than to Silicon Valley. Wall Street is a world where the new hire on the desk gets a talking-to by the managing director for making an error that could have led to a big loss, and where people are regularly reminded not to put anything in writing that they wouldn't want to see on the cover of the New York Times. Silicon Valley is a world where "move fast and break things" is a central mantra, and sometimes those things that get broken are the rules.
This is why I'm very wary watching foreign developments in the payment space. Living in a country where contscyless payments and free instant transactions were a thing long before Apple and Google arrived with their products, these services seem to add very little except for a foreign third party. Sure, PayPal was around in case you needed to buy something online in another country, but I don't believe it's as deeply ingrained.
At the same time I read stories about other countries where people think it's completely normal that some third party app has replaced the bank's role as a payment processor, even going so far as to include these services within the banking environment itself.
The way I see a large amount of fintech is that business savy people see their banks struggle to get up to standards that were common elsewhere ten years ago and try to make a quick buck throwing together an implementation before the banks can get themselves together. These companies solves the needs of the end customer, but only patch over the underlying problems that keep building up because there is no reason to address them anymore.
How much can you really trust a company built on profiting off the failings of a basic institution underlying almost all commerce?
As Schumpeter observed, value creation is accompanied by creative destruction, and right now it looks like we're in the "creative destruction" phase when it comes to fintech.
It was one thing when in the early 2000s creative destruction was involving entities like pets.com, no-one was really hurt by those companies going down, but it's another thing when the company going down might hold your "savings" or owe you money as a SME, like Revolut or Klarna.
A license should be required to prove you understand your ethical obligations to handle anyone else's money.
It's sad that the entire crypto industry happened too fast for the regulations to keep up, with the unsurprising result that vast amounts of customer money have been lost and stolen - the precise reason for regulation.
I would not be surprised if many people have taken their own lives as a result of crypto losses arising directly from lack of integrity of the companies managing the customer money.
The loophole is that employees at hedge funds and investment advisers don't face the same licensing requirements as employees at banks and brokerages who deal directly with customers. There are people who trade billions of dollars of customer funds a week without any required regulatory exam or license.
He had a series 7? Did not know that. But, right, he was a trader with Jane Street, so he had to have a Series 55 and probably the Series 7, which is for brokers.
(Everybody in finance takes the SIE, the "securities industry essentials" exam. That should be required for programmers in finance.)
The only reason bitcoin and friends are “worth” anything at all is precisely because there are no regulations. If crypto companies had to play by the same rules as real fintech firms the whole thing would collapse. Why? Because the entire crypto space is nothing but hot air.
If exchanges and stuff had to play by any rules, they’d go out of business because there is no other reason for crypto’s existence but to run scams.
(Okay maybe it won’t entirely collapse but crypto certainly wouldn’t be valued anywhere near what it is now)
I've never been near code handling money, but "never put anything in writing that you wouldn't want to see in the New York Times" is something I've heard repeatedly at a big tech company too. It seems like pretty standard advice nowadays.
The "move fast and break things" slogan was by Zuckerberg at Facebook, though they've since abandoned it.
I’ve worked at market making firms in US and there were exceptionally strict controls and regulations. Engineers had to be properly qualified to even touch certain parts of the codebase and it potentially came with legal ramifications.
Edge cases matter a lot more to Wall Street than to Silicon Valley. Wall Street is a world where the new hire on the desk gets a talking-to by the managing director for making an error that could have led to a big loss, and where people are regularly reminded not to put anything in writing that they wouldn't want to see on the cover of the New York Times. Silicon Valley is a world where "move fast and break things" is a central mantra, and sometimes those things that get broken are the rules.