Yanire Martes, general counsel of digital-asset banking platform Dinara, said some of the news about the cryptocurrency industry in recent months “shocks the conscience.”
In one of the highest-profile examples of the troubling developments, the crypto exchange FTX filed for bankruptcy and its new CEO claimed the company suffered from a “complete failure of corporate controls.”
Martes said Dinara has responded to the various headlines by remaining in “hunker down and build mode,” particularly when it comes to compliance.
A top priority for the startup company in that regard has been setting itself to operate like a regulated banking entity even though it is not directly required to do so.
“This means a level of rigor and discipline that I think is incredibly important and really represents our commitment to ensuring that this is a safe and efficient platform,” Martes told Legal Dive.
Dinara is aiming to serve as an integrated banking solution for venture-capital firms and startups that manage and transact in both fiat and crypto assets, but it makes clear on its website it is not a bank.
As a result, Martes said the company is in discussions with a banking partner she did not name.
Given this planned collaboration, Martes said Dinara has launched operations in compliance with the Bank Secrecy Act and its implementing regulations, including those to counter money laundering and the financing of terrorism.
Additionally, Dinara is registered with the Financial Crimes Enforcement Network and is pursuing money transmitter licenses in all applicable states.
Martes said these efforts have been resource-intensive, but can be a key differentiator for Dinara in the largely unregulated digital-assets space.
“It sets us apart as having been proactive around the build-out and the proper establishment of a comprehensive regulatory compliance function,” she said.
Martes, who joined Dinara in August, said its compliance initiatives will also set up the company well to comply with any additional regulations that may be coming down the line.
The compliance work Martes has overseen at Dinara has come during her first experience serving as a general counsel.
Previously, she served as head of legal in the Americas for OANDA, where she was the legal and regulatory lead for the U.S. launch of cryptocurrencies and other crypto products and trading offerings.
Some of her other past legal experiences have included serving as an assistant general counsel at the International Swaps and Derivatives Association and as an Axiom Law attorney at Morgan Stanley.
Though she is not a compliance specialist, Martes said Dinara’s commitment to regulatory compliance in the crypto space attracted her to the position.
“From the get-go, it was explained to me that one of the key initiatives was building a firm with a compliance foundation akin to that of a regulated entity,” she said.
Martes credited the support of the outside consulting firm FS Vector with helping Dinara develop its compliance operations, calling them a “trusted partner for me since day one.”
To date, Dinara has gone live with the digital-asset side of its platform and is working with its banking partner to go live on the fiat side of its business.
Tracking the news
Meanwhile, Martes said one of the benefits of monitoring the recent headlines in the crypto industry, such as the developments at FTX, is understanding what went wrong so that Dinara charts a better path.
For example, she said Dinara makes clear that clients’ assets belong to them and not Dinara, and that clients’ assets are kept in fully segregated accounts.
Additionally, the company does not engage in rehypothecation, when financial institutions reuse the assets posted as collateral by clients to secure their own borrowings. She said Dinara also does not commingle funds.
“That turns out to be a really key element for us to highlight given what we've learned and what has happened out there,” Martes said. “And I think that if what follows is an actual regulatory requirement for that to be the case, we are positioned for that.”