Updated on:11/29/2025 04:56 PM 
CryptoSlate recently had the opportunity to speak with David Zacks, the Chief Compliance Officer of bitFlyer USA about the current state of cryptocurrency regulation in the United States.
In his role at bitFlyer, David oversees Compliance, Legal, and Regulatory Affairs. Prior to joining Bitflyer USA, David held various compliance leadership positions at Airbnb, Auka, JP Morgan Chase and Yapstone. He also served as the Director to Mexico at the Financial Crimes Enforcement Network (FinCEN).
Throughout his career, David has established compliance programs, led investigative teams, navigated complex sanctions regimes, expanded global licensing, and provided executive oversight. David holds a B.A. degree from California State University in Political Science and International Studies, and an M.A. degree from the Middlebury Institute of International Studies in International Policy Studies. He is a Certified Anti-Money Laundering Specialist and a Certified Financial Crimes Specialist.
The US authorities have been cracking down on unregulated crypto exchanges left and right lately. Do you think we'll start seeing more traders make the move to platforms like bitFlyer in 2021?
It may seem like there is a crackdown happening, but really these investigations have probably been years in the making. Nonetheless, it's a signal that regulators are keeping an eye on crypto and are taking action against those who ignore regulations or break the law. Traders will undoubtedly make the move as unregulated exchanges are caught. I don't see this being an immediate phenomenon, but I expect it in the near term. Overall, regulatory actions by enforcement agencies are actually down.
For example, on average, the Office of Foreign Assets Control "OFAC" under the Trump/Pence administration has issued 35% fewer enforcement actions and collected 25% less in civil penalties per year than during the Obama/Biden administration. This equates to nearly a $500M difference in civil penalties collected during the course of the Trump administration. It is fair to say that enforcement actions and civil penalties will increase in a Biden/Yellen administration.
As such, it would be prudent for crypto exchanges to redouble their efforts in adhering to applicable regulations. Like I mentioned, if this is the trend and enforcement increases in this next administration, then yes I expect to see more traders make the move.
The exchange market has been put through a wringer lately, with top dogs such as BitMEX getting hunted by the SEC. What do you think about the timing, why now?
It seems more likely that these have been ongoing investigations that are just now being concluded. Regulators may have taken an interest in crypto during the bull run of 2017. Investigations that were undertaken at that time are likely now coming to a close, and that's why it appears the action against crypto exchanges is happening now.
We could see crypto exchanges rushing to settle for past indiscretions as the belief is that the Biden administration will more actively enforce applicable regulations.
What does it say about the broader crypto market that major exchanges have faced increased regulatory scrutiny but the prices of Bitcoin keeps surging?
There are some exchanges working seriously to follow regulations and protect their customers, and governments are taking action against those who do not adhere to regulations or engage in questionable activities.
As crypto exchanges mature and work to overcome their regulatory challenges, and as regulators penalize those who neglect their legal responsibilities, the industry will also mature and gain legitimacy and public trust. This, in combination with other factors such as increased user access, institutional interest, and a growing belief in the value of bitcoin as an asset, have led to higher investment and higher prices.
What was the reasoning behind bitFlyer's decision to reduce fees for traders right now?
bitFlyer evaluated how we could deliver the most value for our users. As a result of that assessment, we felt that reducing fees was the best course of action.
What types of users is bitFlyer most focused on attracting right now? Users who have not purchased crypto before or more experienced crypto traders?
bitFlyer is working hard to ensure that our platform is user-friendly for experienced crypto traders, first-time buyers, and everyone in between. Our platform was designed by former Wall Street traders which has allowed it to develop into a very capable and robust trading platform. Still, we have to develop and implement features that also support and educate less experienced traders as well. bitFlyer is a secure and powerful platform for anyone wanting to buy, sell, or learn about crypto.
From a compliance and regulatory perspective, are there any bold predictions you think we'll see in the crypto market for 2021?
My prediction is that we're going to see the US authorities ramp up their actions against bad actors. Institutions that aren't meeting their regulatory obligations can expect consequences. A huge challenge in the coming year will be related to the Travel Rule.
Overall, I think the crypto market will mature as more and more institutional money finds its way in. Particularly, as legacy FinTech firms such as PayPal and Square get more involved.
Does crypto need more institutional money to advance its narrative as a hedge against inflation?
Institutional money has been accelerating their investment in crypto in recent months. This trend has served the crypto industry by bringing greater legitimacy and public awareness to cryptocurrency and its utility. Undoubtedly, this institutional momentum has reaffirmed the narrative of crypto as a hedge against inflation.
What are the risks, if any, of Bitcoin being too dominated by large funds and institutions as opposed to retail investors?
As I mentioned, there has indeed been higher adoption of Bitcoin by large funds and institutions. Still, there is still plenty of room for individuals and institutions to coexist. It is my belief that additional participation from institutional traders will enable individuals to enjoy greater price stability of Bitcoin and the flexibility to utilize Bitcoin as an asset in more avenues.
Large funds and institutions don't pose a risk to individual traders so much as act as a conduit for the adoption of Bitcoin and cryptocurrency.
Let's role play for a moment — imagine Jay Clayton had called in sick, and you were named Chairman of the SEC for a day. What is one thing you'd do to improve the current state of the cryptocurrency industry?
I would approve a Bitcoin ETF and provide an easier path to licensing crypto broker/dealers.
Speaking of a Bitcoin ETF, do you think we will see one within the next few years?
A Bitcoin ETF could come sooner than many people think. In the near future, we will have significant changes in government leadership and subsequently their regulatory focus. At the same time, prominent former regulators have been shining a more positive light on the crypto industry than in the past.
These, along with other institutional and societal factors, pave the way for large-scale changes in securities regulations and in cryptocurrency. I believe that a Bitcoin ETF may not be as far off as you might think.
David Zacks is the Chief Compliance Officer at Bitflyer USA.
