Brian Brooks Leaves Coinbase to Take a Senior Bank Regulatory Post
Crypto industry lawyer becomes first deputy Comptroller of the Currency; SIX Digital Exchange recruits Tim Grant, formerly of R3 and UBS
Friday, March 27, 2020
By Jeffrey Kutler
Brian Brooks, a prominent spokesman for the cryptocurrency industry on policy and regulatory matters, has been named first deputy Comptroller of the Currency. The Office of the Comptroller of the Currency (OCC), led by Comptroller Joseph Otting, supervises nearly 1,400 national banks, federal savings associations, and federal branches and agencies of foreign banks operating in the U.S.
Brooks, also the OCC's chief operating officer, is returning to a senior Washington role after a year and a half as chief legal officer of San Francisco-based cryptocurrency exchange company Coinbase. Between 2014 and 2018, Brooks was executive vice president, general counsel and corporate secretary of Fannie Mae. While at Coinbase, he served on the boards of Fannie Mae and fintech lender Avant, and he was to relinquish those positions before starting at the OCC on April 1.
Brooks is also reuniting with Comptroller Otting: From 2011 to 2014, Brooks was vice chairman of OneWest Bank, where Otting was president and CEO. Otting stayed on in 2015 after the bank's sale to CIT Group; he became Comptroller in November 2017. OneWest included assets of IndyMac Bank of Pasadena, California, purchased out of receivership in 2009 by an investor group led by Steven Mnuchin, now secretary of the Treasury, the OCC's parent agency.
“Brian Brooks is a strong leader with extensive experience in the financial services sector,” Mnuchin said in a statement on March 16. “I look forward to working with him to ensure the stability of our financial system and its ability to foster greater economic growth for the benefit of all Americans.”
Meanwhile, in another personnel move in the crypto asset market, SIX Digital Exchange, a unit of the Switzerland-based exchange and market infrastructure operator SIX Group, appointed Tim Grant as head of business. Grant was CEO of R3 Lab and Research Center, part of the pioneering financial industry blockchain developer R3, and was previously with UBS.
COO Morgan Retiring
At the OCC, Brooks is replacing Morris Morgan, who as of January 2019 was senior deputy Comptroller, chief operating officer and chief national bank examiner. Morgan, who is retiring at the end of April, became a commissioned national bank examiner in 1989, rose through the ranks and, in Otting's words, “dedicated his career to bettering this agency and promoting the safety and soundness of the federal banking system. We will miss his voice and leadership on the agency's executive committee and wish him the very best.”
Besides bringing together members of the OneWest executive team, Brooks' departure from Coinbase has parallels with that of Dorothy DeWitt. Before being named director of the Commodity Futures Trading Commission's Division of Market Oversight, in September 2019, DeWitt served for nearly a year as Coinbase's vice president and general counsel for business lines and markets. Brooks said that she had “emerged as a national leader in the important debates about the appropriate regulatory structure for cryptocurrency markets.”
CFTC chairman Heath Tarbert said that DeWitt's extensive experience in financial markets and compliance, combined with knowledge of the crypto asset market and distributed ledger technology (DLT), would be “invaluable” as the agency dealt with regulatory issues in these emerging areas. The Division of Market Oversight led development of final interpretive guidance on actual delivery for digital assets, announced on March 24.
Similarly, the OCC's Otting cited Brooks' “extensive career of legal, banking, and financial innovation expertise” and called him “a visionary thinker with a passion for service and a deep understanding of how the financial services industry supports our nation's prosperity.”
Crypto's 'Next Chapter'
With a bachelor's degree in government from Harvard University and a law degree from the University of Chicago, Brooks spent 17 years at the O'Melveny & Myers law firm. He served as managing partner of the Washington office and chair of the Financial Services Practice Group. “At O'Melveny, Brian was involved in many of the most important financial services policy issues of the past decade, including representing former Federal Reserve Chairman Alan Greenspan and other clients before the Financial Crisis Inquiry Commission,” Coinbase CEO Brian Armstrong noted in a September 2018 blog about Brooks' arrival there.
“His arrival is part of our effort to expand our legal, compliance and government affairs capabilities as we head into this next chapter for the company and the cryptocurrency industry as a whole,” Armstrong wrote.
A frequent presence at legislative and regulatory hearings, Brooks testified in October 2019 to a California State Assembly panel, introducing Coinbase as the biggest virtual currency trading platform (30 million accounts), largest crypto-asset custodian ($20 billion-plus) and provider of a dollar-backed stablecoin with more than $150 million in daily transaction volume.
“Contrary to popular belief, the cryptocurrency market is subject to a complex web of state and federal regulatory oversight,” Brooks said, mentioning the Commodity Futures Trading Commission, Securities and Exchange Commission, Federal Trade Commission, Treasury's Financial Crimes Enforcement Network, and others at the state level. He argued that California could offer “a single charter that simultaneously authorized the holder to trade, lend, and custody crypto assets,” and with a few other provisions could be more competitive with the New York State Department of Financial Services' BitLicense framework. (Coinbase obtained a New York virtual currency and money transmitter license in January 2017.)
This January, Brooks posted a Forbes.com blog on the “flawed premises” underlying certain themes in cryptocurrency regulation, saying: “We may be in the early innings of crypto, but there is a major league game ahead, and this game needs rules. But in a scramble to devise rules quickly, legislators and regulators tend to fall back on assumptions, heuristics and biases that overstate risks, understate benefits, or in some cases simply miss both current and historical facts.”
Pursuing a Digital Asset “First”
SIX Digital Exchange (SDX) represents a bid by SIX Group, an established market, payments, and data services utility owned by its 127 bank users, to be “the first market infrastructure in the world to offer a fully integrated end-to-end trading, settlement and custody service for digital assets.”
SDX last September announced the launch of a prototype exchange and central securities depository running on DLT, also known as blockchain. “Unlike conventional exchanges,” SDX explained, it “will facilitate instant settlement that will remove counterparty risk and the need for default fund collateral at a CCP - this implies that if the buy and sell side have the necessary cash and assets to fulfil a trade, settlement will occur instantly.”
SDX said soon after that it was working with the Swiss National Bank on a proof of concept of settlement of tokenized assets using digital central bank money. It is a project of the Swiss center of the Bank for International Settlements Innovation Hub. (BIS announced in February that Morten Bech, head of secretariat of the Committee on Payments and Market Infrastructures, would start in April as head of the Swiss hub center.)
SIX said on March 19 that it turned to Tim Grant, as head of business, to drive a vision that goes beyond establishing a world-first, fully regulated, DLT-based digital asset exchange to “creating a whole ecosystem that is expected to transform the financial services industry.”
“The team has already made huge progress, and I'm looking forward to contributing my experience and working with our institutional clients around the world to continue the growth and expansion of the next generation of financial market infrastructure,” said Grant, who in addition to his blockchain work with R3 had been managing director of UBS O'Connor and UBS Investment Bank. He most recently served as CEO and co-founder, with other R3 alumni, of enterprise DLT start-up DrumG Technologies.
“Tim has a comprehensive background in both the new and old worlds of capital markets innovation,” said Thomas Zeeb, SIX Group head of securities and exchanges and chairman of SDX. “This background is an essential prerequisite to successfully lead the development of SDX and to fulfill SIX's growth ambition to build the financial ecosystem of the future. We are pleased to have him on board and look forward to working with him to execute our vision.”