Meet Mike Lempres: Former Mayor, Current GC and Crypto Industry Veteran
Mike Lempres, chief legal officer at San Francisco-based Coinbase, has walked a unique career path. His experiences, both in-house and in the public sector, have given him a deeper understanding of why and how regulators do what they do.
August 17, 2018 at 10:33 AM
4 minute read
In the still-emerging, fast-paced crypto world, some count industry experience in dog years.
By those standards, Mike Lempres has been in the crypto sphere for a few decades. In human time, that's since 2012.
“I've been in it longer than most,” he said.
Six years ago, when Lempres was at Silicon Valley Bank, the then-assistant general counsel and practice head found himself engaged in a discussion about how to classify the increasing number of crypto companies asking the bank for support.
Lempres worked with regulators and began to learn about nascent crypto businesses and the regulatory concerns ahead. And he liked the crypto world—with all its complexities—so much, he left his job to get in on the fun.
“Ultimately, I had a different risk appetite than the bank,” he said.
Lempres began working for one of the bank's customers, bitcoin startup Bitnet Technologies Ltd., in 2015. There, he got an even closer look at the rapidly changing crypto industry as general counsel, corporate secretary and chief compliance officer.
He stayed with the company until its 2016 sale to Japanese e-commerce company Rakuten, which went on to launch a cryptocurrency of its own.
Staying in the crypto lane, Lempres moved to Bitnet competitor Coinbase, as chief legal and risk officer. And while his role has changed, a lot of the industry's legal challenges are the same. Namely, that when it comes to crypto, regulators can't keep up with changes in the market and technology.
He noted some regulations can take years to become official. By the time they're finished, the industry is likely to already have moved on.
“Regulatory procedures in government are set up in such a way that they move slowly,” Lempres said. “Crypto moves very, very fast. And it's a real challenge.”
That's especially true for a company that wants to be compliant, a priority Lempres said is at the top of Coinbase's list. But how can a company comply with regulations that don't yet exist?
For now, Lempres' team is focusing on the rules that are in place—even those that pre-date the industry—though they often imperfectly apply to a field they weren't designed for. He said there is still confusion on a number of regulation-related issues, including whether cryptocurrencies are securities or commodities and how taxation will work.
“Oftentimes we are agnostic about whether [cryptocurrency] is a security or a commodity, or whatever the issue is. But we need to know the rules,” Lempres said.
“We will comply with the rules, but if they don't tell us the rules, we can't comply. And we can't take the risk that retroactively [regulators are] going to look back and say you did this the wrong way. That's unfair.”
That's one reason his team has made an effort of working with regulators, he said, offering suggestions when they feel they've found a solution that's good for both the industry and consumers. But more often than not, those suggestions leave the pace unchanged.
Luckily, Lempres has learned to have patience with slow-moving bureaucratic procedures. In 2016, he was elected mayor of Atherton, a town in Silicon Valley that many tech notables, including Facebook's Sheryl Sandberg and Alphabet's Eric Schmidt, have reportedly called home.
It's a role he held alongside his position at Coinbase, and it's one that required him to sit patiently through hourslong meetings on parking zones and citizen concerns.
Those often slow-paced conversations about which regulations should change in his own town were challenging, but they also gave him a unique view into the mind of the regulators he speaks with as an in-house lawyer. While he's no longer mayor, he continues to sit on Atherton's city council.
“I think it actually helps my job because … I'm putting on that [regulator] hat, and it's very similar to the hat we're asking our regulators at the state or federal level to wear,” Lempres said. “You learn about the thought process and appreciate it.”
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