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By Joseph Ciccolo, CJ’04, Founder & President, BitAML, cryptocurrency compliance advisory firm.

Let’s start with the basics. “Cryptocurrency” refers to digital currencies that are completely decentralized, meaning they operate independently of a central bank. Instead, these “coins” or “tokens” and their trade are regulated by an enthusiast community that records transactions transparently in a public digital ledger called a blockchain. Bitcoin and other “altcoins” are not physical, or “fiat,” money like what’s in your wallet. But make no mistake; there is a genuine economy based on this currency, and it’s growing every day.

At face value, cryptocurrency is rife with contradictions. Critics point to regulatory ambiguity and volatile price fluctuations, yet the data show that entrepreneurship in the space is rapidly growing.

While there exists a lot of uncertainty in the field, there is also an undeniable level of opportunity, and that becomes clear when you understand cryptocurrency for the innovation that it is.

Before founding BitAML, a leading cryptocurrency compliance advisory firm, in 2015, I was a financial compliance professional specializing in anti-money laundering (AML) and fraud prevention for the traditional banking industry. I built a steady career over the course of 10+ years at some of the world’s leading financial institutions. When I heard about bitcoin for the first time, I was curious about it, and didn’t immediately dismiss it as a fad like my colleagues did.

I vividly remember looking around the office one day. I was struck by the rows and rows of filing cabinets, the worn-out labelers, the ancient copy machines, colleagues performing the same tasks and filling out the same spreadsheets, often duplicating efforts. I also thought about changing demographics and recent alarming statistics that half of all millennials don’t see a competitive advantage between traditional banks, and that 70% trust companies like Google, Apple or PayPal with their financial services needs over a traditional financial services institution.

I saw this as a warning. The more I learned, the more I looked past the criticism (some valid and some not) and began to see Bitcoin’s disruptive value. I was seeing something that critics weren’t – an amazing innovation in money and technology. I sat there looking at filing cabinets and thought, “There’s simply no way all of this can compete with all of that.”

Cryptocurrency is the future of financial services, and I knew I wanted to be where the future was.

Bitcoin, The Disruptor

Critics don’t look much further than the price of bitcoin relative to the dollar; they regard cryptocurrency as a speculative asset. I’m still struck by the number of professionals willing to blindly repeat criticisms of cryptocurrency and yet, when I ask whether they’ve ever talked to anyone in the space, they say no.

People working in cryptocurrency are some of the most intelligent, creative, and engaging professionals you’ll ever meet. They will spend hours talking thoughtfully about innovation and technology and debate the current and future impact of cryptocurrency on banking and financial services.

In Fall 2014, I was visiting family in Northern California, and had taken some time to attend a couple of bitcoin meetups. I didn’t have business cards, a website, or even a company at the time. I started out with a desire to get to know the industry and learn more about where I could get involved. I introduced myself as an AML and compliance expert and asked if anyone had any questions. Almost every hand shot up. Needless to say, a compliance professional is not usually that popular! But, it revealed a humble curiosity at the heart of the cryptocurrency space, as well as a desire for legitimacy and to do business “by the book” in an industry critics characterize as a hotbed of criminality and money laundering.

I immediately recognized a major gap in the industry: there wasn’t a company providing regulatory compliance consulting and policy for growing businesses in the cryptocurrency space. I saw my opportunity to get involved and work with some of the best and brightest in tech and financial services.

BitAML was born in 2015.

Why I Believe in Bitcoin

A lot of what people believe about cryptocurrency doesn’t stand up to scrutiny. People are often not aware of the many legitimate use cases cryptocurrency has in our global society. As it turns out, many of its harshest critics have never executed a bitcoin transaction themselves, nor can they even articulate what it is or how it works

Cryptocurrency is more than just a digital store of value. It offers a host of unique advantages: it can be transferred instantaneously from person-to-person with no middlemen and marginal fees; it can be used in any country; there are no prerequisites or limits to its use; it allows people to hold their own money, and sending it is as easy as sending an email.

Sometimes I’m asked why a traditional banking compliance guy like me would defect to a “risky” and “unproven” industry like cryptocurrency.

First and foremost, I’m a fan of it. Cryptocurrency is new, innovative, and it exposes the flaws of traditional banking that we simply take for granted because there hasn’t been an alternative. Traditional banking has run out of its own innovation; they just retrofit existing innovations like web apps and mobile access (and, by the way, they were the last major industry to join that party).

With cryptocurrency, I like that people have access to their own money and have complete ownership of it. Some countries outright discriminate against certain people and deny them access to basic financial services, something we take for granted. Cryptocurrency allows 2.5 billion people without access to basic traditional banking to send and store their own money with a simple flip-phone and internet connection, both of which are increasing prolific in the developing world. It provides access to banking to people who may never be able to leverage financial services from traditional banks.

Lastly, the future of this industry is actively being written right now. You see its flaws because they’re all out in the open. Cryptocurrency is 100% transparent; we don’t have financial overseers writing arbitrary policy behind closed doors. It’s a new and disruptive field and offers a unique opportunity to take part in crafting its story.

Not all traditional financial service providers have been slow to the table. Fidelity Investments and its CEO, Abigail Johnson, have championed cryptocurrencies. The company had made several venture investments in bitcoin-related businesses, recently acquiring a 15% stake in Neptune DASH, a fund that holds DASH masternodes, which sustain and care for the ecosystem supporting the DASH cryptocurrency, an alt coin or alternative to bitcoin. Not to be outdone, Fortune 500 financial services company, USAA, partnered with Coinbase, allowing its members to purchase cryptocurrency from the online exchange via their deposit account.

In fact, my company, BitAML, is working with some traditional institutions that are becoming early adopters. It’s disheartening how few traditional institutions embrace this forward-thinking attitude, but it is an encouraging sign.

What is cryptocurrency? In truth, cryptocurrency is just technology, and technology is synonymous with innovation and opportunity. Once you understand how cryptocurrency works, and execute a transaction for the first time, you see it for the innovation that it is.

If you want to talk about cryptocurrency, compliance, or wax about the old days alumni-a-alumni, I can be reached any time at joe@bitaml.com.


Joe Ciccolo (CAMS, CFE, AMLCA) is the founder and president of BitAML, a consultancy firm that provides cryptocurrency compliance training to bankers, policymakers, and law enforcement officials. He has built AML compliance programs for top-100 financial institutions and banks. He is a graduate of Northeastern University’s College of Criminal Justice. Read more about Joe by visiting his profile on our Alumni Stories page.

Published November 2018