The Evolution of Crypto Regulation: Insights from Xapo Bank’s Joey Garcia
In a recent interview, Joey Garcia, Director and Head of Regulatory Affairs and Public Relations at Bitcoin-focused Xapo Bank, shared his journey and insights into the evolution of digital asset regulation. Accompanied by CryptoSlate Senior analyst James Van Straten, Garcia provided a detailed account of the challenges and milestones in shaping regulatory frameworks for digital assets.
The early days of crypto regulation
Joey Garcia’s journey at Xapo Bank began in 2014 when he met Wences Casares, a renowned figure in the digital assets space. Casares approached Garcia with the idea of setting up a regulatory framework for cryptocurrencies in Gibraltar. Garcia recalls:
“Wences came to see me in 2014 and said, you know, laws and regulations in this entire universe don’t exist. If you can convince a small jurisdiction to act quickly and adapt, that’s a great opportunity.”
Despite initial skepticism and resistance from authorities, Garcia and his team persevered. Their efforts culminated in the development of a regulatory framework that came into effect in late 2017, making Gibraltar one of the first jurisdictions to adopt a comprehensive approach to the regulation of digital assets.
Building a robust framework
Garcia emphasized the importance of creating a prudential regime that goes beyond basic compliance. “We developed a framework that was a year and a half ahead of the FATF recommendations,” he explained. This forward-thinking approach positioned Gibraltar as a regulatory leader and attracted major players in the digital assets industry.
The framework is designed to address the complexities of the evolving crypto landscape. Garcia shared his experience working with several countries, conducting gap analyzes and providing training to regulatory agencies. “I have conducted gap analysis and assessments in countries such as Singapore, Cambodia, Thailand and many others,” he noted. This extensive experience has given Garcia a unique perspective on global regulation.
Xapo’s unique value proposition
Xapo Bank’s commitment to security and compliance sets Xapo Bank apart in the cryptocurrency industry. Garcia highlighted Xapo’s transition from the largest Bitcoin wallet provider to a fully licensed bank. “We have always been a Bitcoin wallet provider, but we wanted to offer more. So, we have obtained a full banking license to provide safe and reliable financial services,” he said.
Xapo’s emphasis on safety is clearly reflected in its activities. The bank maintains a high liquidity ratio and ensures that customer assets are fully covered. “At
Navigating global regulatory challenges
Garcia’s role extends beyond Xapo Bank. As a specialist advisor at the United Nations, he provides training and assessments to regulatory authorities around the world. He discussed the importance of understanding the local context and addressing unique regulatory challenges in different countries. “For example, in Vietnam, authorities initially believed that DeFi did not exist. But when I showed them the data, they were number one in DeFi adoption,” he said.
This hands-on experience has shaped Garcia’s approach to regulation. He advocates a pragmatic and informed approach that takes into account both global norms and local realities. He emphasized:
“It’s about time and training. We need to educate people about the differences between regulated custodians and other platforms.”
The future of crypto regulation
Looking ahead, Garcia sees a future where regulatory frameworks continue to evolve in response to the dynamic nature of the crypto industry. He believes that trust and reliability will be crucial factors in the adoption of crypto services. He noted:
“Your longstanding reputation within the industry is one of the most important things. It just takes time, especially in this industry, to see who the real winners are and who the truth tellers are.”
Xapo Bank aims to be a secure pillar in the financial ecosystem and offer unique services that bridge the gap between traditional finance and digital assets. As Garcia put it:
“We want to provide secure access to US dollar and Bitcoin accounts. It’s about protecting and growing your wealth in a banking environment that you can’t match in any other way.”
Joey Garcia’s insights provide a compelling story about the challenges and opportunities in the world of crypto regulation. His work at Xapo Bank and various regulatory bodies highlights the importance of a proactive and informed approach in shaping the future of digital finance.
