Interview with Joe Ciccolo, Founder and President of BitAML
These past few months, headlines are abuzz with news about cryptocurrencies and their skyrocketing valuations. If you have been following along, you may have learned a bit about cryptocurrencies, and the air of mystery around them. This spurred my interest in how regulation affects businesses in the field of cryptocurrencies.
Last week, I got the chance to sit down with Joe Ciccolo, founder and president of BitAML, a regulatory and compliance consulting firm that helps businesses navigate the ever expanding regulations that surround cryptocurrency. The transcript of the interview can be found below.
Aaron Ngo (AN): Can you tell us a bit about yourself and your company bitAML?
Joe Ciccolo (JC): Sure! I’m Joe Ciccolo, the founder and president of BitAML. We are a regulatory and compliance consulting firm that helps crypto businesses understand the different regulations surrounding crypto that they should be aware of for their company. I’m also a “recovering banker”. Prior to starting bitAML, I graduated from Northeastern University and I worked in compliance in traditional banking for over 10 years. Once introduced to the world of crypto, I knew I wanted to take the experience I had working with compliances to coach and advise the next generation of innovators. It’s been very rewarding thus far, being able to see your impact and contribute to the greater good.
AN: Following that question, how did you get introduced to the world of crypto, and why did that lead you to start bitAML?
JC: When I heard about the world of crypto, I was immediately intrigued. I began to look into it on my own and “went down the rabbit hole” per say when I began to see amazing innovation. I saw the potential of crypto to revolutionize this industry and wanted to become a part of it. I used every opportunity I could to learn more about cryptocurrencies. I talked to whoever I could involved in the space. I attended BitCoin meetups on the weekends and even on my vacations sometimes. At a few of the events, I realized a crowd seemed to draw around me when I mentioned my background in compliance. That’s when I realized there was a need, and so started bitAML. We’ve been going strong for 2 and a half years now.
AN: So you didn’t have a prior tech background at all prior to starting bitAML?
JC: Correct.
AN: Would you say it was more difficult to understand what was going on in the space because of a lack of technical expertise?
JC: Not really, I’d say it was maybe more difficult in the beginning. When originally learning about the space, I had to put the tech jargon into a more common way of speaking in order for me to understand it. It took more time up on the front end, but that self learning definitely paid off. Because I understand the space without a tech background, I think I’m better able to communicate to others without a tech background, like a banker.
AN: That’s awesome to hear, especially as someone who’s not very technical himself. I’m curious to know though what kind of firms you usually work with on a day to day basis, and what common challenges do they face?
JC: There’s a diverse array of individuals interested in the crypto space. We’ve seen coders working on a startup out of mom’s basement to people out of the financial district. The main challenges they face are knowledge gaps. There are different applications of finance, and some clients may need to be taught about different things to help fill these gaps in their knowledge. The conversations we have with our clients are adapted to meet their needs and their current level of knowledge. At the end of the day this is what makes crypto such a fun place to be in. If there’s a room full of people at a crypto event it’s hard to find any commonalities between them besides that they’re all interested in crypto. The space is exciting for all different types of people for different reasons, and bitAML exists to help them understand the regulatory aspects of the space. It’s hard to really define who people in crypto are, as the space is really open to just about anyone.
AN: Could you touch on what the current state of compliance and regulations are in the US in this space?
JC: It is constantly changing. So many different agencies are weighing in on what crypto actually is and how it should be regulated. Many times, more than one agency comes into play as well depending on the company.
“The regulatory landscape in the United States for virtual currency and blockchain technology is more defined than ever in 2017. As of January 1st, 2017 there are now 13 states with clearly defined positions and/or regulations in regards to the blockchain and digital currency industry.”
Here is also a great related BitAML blog post that dives deeper into this question, “State of Regulation 2017, Bitcoin and Blockchain”.
AN: What are the main challenges you face in compliance that differs from what you used to see in traditional banking?
JC: The biggest difference is that traditional compliance has been tested, and for the most part best practices are in place. The crypto space is agnostic and new, so traditional approaches may not apply. However, crypto has done a good job of self control for the most part by creating features that allow for safety and regulation. This is also because the industry is newer, it is formed of many startups that are more nimble. These startups are able to change a lot faster and can self-regulate better. For example, selfie verification is a strong compliance control.
AN: Can you expand a little bit about how the regulatory requirements change depending on the company?
JC: Depending on what a company is doing with crypto and their business model, you’ll have different regulatory requirements. Different agencies define crypto as different things. For example, the IRS thinks of crypto as property which can be taxed and audited for tax purposes. The SEC considers crypto as a security, and is now currently focusing on ICOs (which is a mixture of angel funding, crowdfunding, and an IPO). Though the space is generally filled with good individuals, sometimes people with less than good intentions have come in, thus creating the need for regulation.
AN: Could you talk about how different regulations have affected crypto startups, particularly in the US?
JC: Yeah, so obviously startups have to work around the regulations. In particular, the US has been relatively slow to modernize policies and regulation. Though policy makers should do no harm, they also have to realize the potential of this technology and do extensive research on the good and the bad. Then, they should make sure the efforts match the tech. Many times, policy makers will just add a few sentences to current laws that will pertain to crypto. Though this is faster, eventually it leads to a confusing web of laws that overlap and don’t really make sense. Think of a Bonzai tree with many different branches all overlapping.
AN: How can the government do a better job of supporting and implementing crypto?
JC: For starters, they can be more in touch with the people. If politicians learn and listen more to entrepreneurs, they can better support them. Asking crypto experts about the space and really trying to understand what they need to know about this, it will humanize and demystify the industry. They should try to grab a better understanding of what products/ services are available and why they appeal to people
AN: I agree, most government officials could do a better job of understanding the people they serve. You mentioned that the crypto industry is somewhat “mystified”, could you talk a little bit more about why this is?
JC: Yeah, the crypto community in my experience has been very communal and tight knit. They’re very open to discussing the good and the bad. Unfortunately, public perception seems to be tainted from crypto’s early days. When bitcoin first came out it was thought that it was only meant for the darkweb and drugs and that sort of things. It’s been a struggle to shed that image since then, and it still an upward battle. Traditional institutions expressing interest in the space has definitely helped. This “mainstreaming” of the crypto space has appeared in other spaces as well, such as the internet and social media.
AN: Interesting. I’m curious to know what you see as the future of cryptocurrencies and the regulations around them?
JC: I predict stronger controls will be put in place to expose fraudsters. More regulations will continue and more states will weigh in more formally. The government has done a relatively good job so far and I think as crypto becomes more mainstream that more time will be put in with regulators. Nothing will be that heavy handed, more fair regulations will come out I believe. I also predict more emphasis on consumer protection and the government will do more to protect consumers.
AN: That last question I have for you is how would you suggest current students who are looking to learn more about the space?
JC: There’s a ton of great resources out there to get acquainted with cryptos, blockchain, etc. I used a lot of YouTube Videos to start. I really just listened and learned about what other people were contributing to the space. It was nice because I was able to do this at my own pace. Another helpful resource is the blockchain education network (BEN). It provides you a community filled with discussion and possible conferences, meetups, and swag. Above all though I’d recommend using your status as a student to learn from professors and people in the industry. So many people are willing to talk to students and you shouldn’t be afraid to ask about what they do and how they view the space.
If you’re looking to get in touch with BitAML, you can contact them through their website here or read more through their own personal blog.
