Desiree Smith's journey into the world of crypto was one of curiosity and timing.
"I got into crypto when I was in law school," she explains. "I heard about it casually as early as 2013, but it wasn’t until 2017 that I truly ‘fell down the rabbit hole’ and became fascinated by the technology.”
As she dove deeper into independent research on Bitcoin, she recognized the true value of decentralized finance and its potential to address many of the inefficiencies in traditional financial systems. This fuelled her academic curiosity and led her to write a series of legal papers on the applicability of securities laws to digital assets, ultimately deepening her involvement in the space.
Fortunately, 2017 was still relatively early in the crypto world, especially in the legal realm. At that time, regulatory frameworks were still in their infancy, and many legal questions around digital assets remained unresolved. This gave her the opportunity to be at the forefront of nascent policies and navigate uncharted territory, as the industry rapidly evolved.
Her professional career took off soon after, with a short stint at Bitbuy, followed by nearly three years at Coinsquare, one of Canada’s leading crypto exchanges. Both Bitbuy, and Coinsquare are significant players in the Canadian cryptocurrency landscape, and in recent years, they have joined the same parent company – WonderFi Technologies. During this time, Smith also took on the role of an educator, teaching a continuing education course on blockchain and cryptocurrency at Toronto Metropolitan University (formerly Ryerson University).
“I developed the course to educate professionals – tax experts, bankers, and government agencies – on the fundamentals of blockchain, demystifying crypto concepts and helping them understand how the technology impacts their industries.”
Smith's path eventually led her to the United States, where she worked on the legal team for Genesis, an American institutional lender specializing in the lending and borrowing of digital assets. Unfortunately, Genesis was heavily impacted by the cryptocurrency market downturn in 2022, particularly the collapses of major players like Three Arrows, Terra and FTX. This turmoil led Genesis to file for Chapter 11 bankruptcy in January 2023 to seek court protection for reorganizing its lending operations. However, by this time, Desiree had already joined the regulatory affairs team at Solidus Labs, a New York-based company that provides trade surveillance solutions for cryptocurrency and digital asset markets.
“The shift from being in-house counsel in a core legal function to concentrating on policy development gave me valuable insights into how regulations shape industry practices and vice versa.”
Currently, Smith finds herself at Figment, a Canadian staking company catering to institutional clients. Staking crypto assets allows holders to earn rewards for validating transactions and securing the network. While Smith is still based in New York, the ability to use her Canadian experience is not only a comforting reminder of her roots but also provides a broader perspective on the global cryptocurrency landscape. This perspective allows her to bridge insights and practices from both markets and contribute to more effective legal guidance in the ever-evolving crypto industry.
In Canada, regulators have introduced frameworks for handling governance tokens, stablecoins, and lending protocols, with the intent of pushing platforms toward compliance. It’s possible that the relatively prescriptive approach, she suggests, can be traced back to early and impactful incidents like the collapse of crypto exchange QuadrigaCX in 2019, a high-profile fraudulent scandal in Canada that caused many investors to lose access to their crypto assets on the exchange. Largely unregulated and without proper oversight, QuadrigaCX gave its founder unchecked control over the company’s operations and finances, which ultimately led to its downfall.
“The fallout from QuadrigaCX," she notes, "really set the tone for Canadian regulators, heightened their awareness of the risks in the crypto space and prompted a more cautious, proactive stance moving forward.
"Providing this regulatory clarity is essential for fostering innovation," she adds. "However, overly rigid regulations that don't consider the nuances or the novel aspects of this technology can end up stifling the very innovation they're designed to support." She sees a balanced approach as critical – one that promotes growth and adaptability while still ensuring strong protections for investors and maintaining market integrity.
"The best way for regulators to achieve their goal of protecting investors without curbing innovation is through collaboration with market participants." By developing standards and best practices for both centralized and decentralized trading platforms that account for the technology's complexities, Canada can be a leader in crypto innovation.
However, the digital economy extends far beyond Canada, as it is fundamentally about transacting on a global scale. Crypto companies face the challenge of navigating a multifaceted regulatory landscape that varies widely across jurisdictions.
Despite differences in cross-border regulations, Smith notes that “much of the regulation is fundamentally harmonized around key principles, meaning that all jurisdictions share many of the same core objectives." Whether it's preventing money laundering, ensuring market integrity, or fostering fair pricing, these shared goals provide a foundation for regulatory alignment, even as specific rules differ.
The constant evolution of regulatory frameworks across jurisdictions guarantees an ongoing demand for legal expertise.
"There's a tremendous amount of regulatory work to be done in this space, and the complexity involved in understanding and applying these evolving rules are something AI can't easily replace – at least not yet!”