Alex C. Levine recently was named chief regulatory officer and head of legal for TrustToken Inc. based in San Francisco. TrueCoin LLC, a subsidiary of TrustToken, is the issuer of TrueUSD, a stable-value cryptocurrency (stablecoin) tied one-to-one to the U.S. dollar.

Levine, 40, has been a regulatory attorney and executive focusing on securities and derivatives law, and more recently on cryptocurrency, for more than 15 years. He has held senior-level legal posts at the U.S. Commodities Futures Trading Commission and the U.S. Securities and Exchange Commission during the regulatory response to the financial crisis and rule-making under the Dodd-Frank Act, according to the company.

He also has been chief compliance officer and head of legal at LedgerX, a derivatives exchange and clearinghouse for cryptocurrencies; and general counsel and chief compliance officer of the hedge fund Gladius Capital Management LP.

Levine, who has a law degree from Stanford University Law School and a master's degree in business administration from the University of Chicago Booth School of Business, began his career as an associate at Kirkland & Ellis. He recently spoke to Corporate Counsel about his company, its regulatory challenges and what he looks for in outside counsel. This interview has been edited for clarity and length.

Corporate Counsel: TrustToken Inc. is a one-to-one stable dollar cryptocurrency launched earlier this year, similar to Gemini Trust and Paxos Trust offerings that were recently licensed by the New York Department of Financial Services. What is the principal advantage of your product?

Alex C. Levine: Since we do not run an exchange, we have the ability to list in any exchange globally that would like to have our product. As a result of that agnostic change characteristic, we have a broader reach globally.

Who would be interested in this?

Traders in general looking to get in or get out of more volatile (cryptocurrency) like bitcoin or ethereum. This provides the ability to execute arbitrage or seek a safe haven. It provides the ability to use cryptocurrencies without having to constantly move in and out through a more cumbersome process.

How is TrustToken regulated?

The issuer of TrueUSD, TrueCoin LLC, has been registered and licensed since March 2018 as a Money Services Business with the Financial Crimes Enforcement Network, which is a bureau of the U.S. Department of the Treasury. No other registrations or licenses have been obtained as of yet. The issuer of TrueUSD has not registered with, nor sought to obtain, a BitLicense with the New York State Department of Financial Services, because no business occurs in New York and no purchases or redemptions are allowed by New York residents.

What legal or regulatory challenges does TrustToken face?

For companies within the blockchain-cryptocurrency space, such as TrustToken, the greatest regulatory challenge is the myriad of competing and developing regulatory requirements from different jurisdictions. Currently, U.S. regulators such as the SEC, CFTC, FinCEN, and OCC at the federal level, along with financial departments at 50 states plus territories, all have purview over cryptocurrency. Also, given the borderless nature of cryptocurrencies, there are scores of additional regulators in countries across the world, especially in Europe and Asia, that are developing their own regulatory regimes.

To state the obvious, all these regulatory bodies have competing interests and viewpoints. From a legal risk-management perspective, this makes it very difficult to cognize an overall regulatory framework for cryptocurrency, and to institute change-management procedures that can proactively respond to new regulations.

Is it difficult to find legal talent to deal with cryptocurrency?

I think it is. It is a very new area and we are figuring it out as we go. A lawyer with 50 years of experience may not be able to add any more value than one with five years' experience. There is the issue of finding people who are steeped in the space. That can be difficult. And it brings together a lot of issues that have never been brought together. For crypto, the SEC and CFTC are both regulators with jurisdictional hooks. You have lawyers who are SEC or CFTC experts and they can give you an answer, but they don't tell you what the other regulators think. So in a sense, the lawyers who are steeped in both regulatory worlds are very few. It's hard to get that perspective on how it's tied together.

On whom do you rely for outside legal counsel?

I rely on Katten Muchin Rosenman and Gary de Waal, who has deep expertise in this space. Also Orrick, Herrington & Sutcliffe for corporate structuring in the U.S.  and elsewhere; the partner we have been working with is Joseph Perkins.

What kind of background or expertise is useful in virtual currency lawyers?   

A technical or finance background is helpful, but lawyers who think about things from risk-management and finance perspective are most helpful. Before the crypto boom, talking to a regulator was a bad thing but now you want to proactively engage regulators.

What drew you to this niche as a career?

I found it intellectually to be a challenge … the whole intellectual and logical formulation around crypto was fascinating. Having the opportunity to do that, and combine intellectual curiosity and the regulatory [aspect]. The crypto regulatory world is moving at extraordinary speed, compared to what the regulatory world usually does. I don't think that happens but once in a generation or once in a lifetime. It makes me excited to get up to work every day. That is what drew me here and is keeping me here.

Finally, how would you as a chief legal officer like to see the regulatory hurdles or challenges of cryptocurrency companies like yours be addressed?

The best ways for this to be addressed would be threefold, with the goal of fostering consistency of regulation and expertise within regulatory bodies for addressing a maturing cryptocurrency landscape. 

First, within the United States, many of the competing regulatory issues that exist between the federal and state regulators could be solved if Congress updates the current securities and commodities laws to assert jurisdiction at the federal level over spot transactions in cryptocurrency. 

Second, until Congress takes such action—if ever—regulators in the United States could work together to share expertise and engage the crypto industry to ensure, at the very least, that the multiple regulatory frameworks are not at odds with each other. 

Third, regulators across the globe could come together and agree on a set of principles to guide the creation of regulatory frameworks in different jurisdictions to adopt regulatory best practices. That would ensure consistency in the principles guiding their design, similar to the international standards put forth in the Principles for Financial Market Infrastructures issued by the Bank for International Settlements.

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