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A conversation with Steven Eisenhauer, Chief Risk & Compliance Officer at Ramp Network

A conversation with Steven Eisenhauer, Chief Risk & Compliance Officer at Ramp Network
Credit: Darren Joseph

Can you explain the core components of Ramp Network’s compliance strategy, including how they relate to the UK’s Financial Promotions regime?

From the very beginning, Ramp has sought to be a leader in the compliance space for the crypto industry.  It was a core part of my job interview before I joined; I wasn’t willing to join a firm that doesn’t take compliance seriously, and contribute to the swell of negative media and consumer opinion.

There have been many positive developments in the market since I joined, however, the negative noise has also increased. This has only served to reinforce our stance and our strategy, which is to set the regulatory standard in crypto.

We are in a space that changes quickly and doesn’t have a very clear regulatory roadmap, especially when we look across markets and regions. There are not always well-established compliance and legal requirement frameworks. Our approach has been to get ahead of anything that comes out. We work closely with our regulators, look at best practices from other industries and try to set the roadmap ourselves. This has been part of our experience around the Financial Promotions regime too. We have been very successful in working directly with the Financial Conduct Authority (FCA) in an area that has been challenging for the rest of the industry.

It was admittedly a struggle for us to initially understand relatively vague expectations. However, through a fair bit of back-and-forth and open dialogue with the FCA, we can comfortably say we are the leader in financial promotions compliance in the crypto space in the UK.

Ramp has developed a unique tripartite model with Archax Limited. Could you elaborate on how this model works and its significance for the crypto industry?

Our partners, primarily non-custodial wallet providers and web3 firms, often cannot register under the current Money Laundering Regulations (MLRs) or seek FCA authorisation. The only way for them to communicate financial promotions to UK customers is through a Section 21 Approver.

Ramp has been working with an external Section 21 Approver, Archax Limited, to develop a new model to support partners who want to communicate financial promotions to UK-based customers.

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Under this tripartite model, Ramp is onboarded and reviewed by the Section 21 Approver as the backend financial compliance controls provider. Ramp’s partners will then be able to have their financial promotions assessed and approved (including those on their website and/or applications) which they wish to communicate to UK-based customers. This model is entirely new, and demonstrates Ramp’s ambitious, forward-thinking, and compliance-led approach to the ever-changing and challenging face of crypto regulations.

Prior to this, non-registered businesses could not integrate an on-ramp service without violating the Financial Promotions regime. Effectively, there was no way for a wallet or other to provide any other features, like staking, on ramping, swapping. It was even referred to by some in the industry as a “de-facto ban on wallets in the UK”.

So the model means that industry partners can continue to offer services within the UK, in a modified, but compliant manner.

What were the biggest challenges Ramp faced in getting this tripartite model approved, and how did you overcome them?

The primary challenge was that the FCA had not previously considered such a model. However, they were open to innovative solutions.

We overcame this by maintaining a transparent and cooperative relationship with the FCA, sharing our plans and ensuring they understood our compliance framework. This approach helped resolve the issue that non-registered businesses couldn’t promote their services, enabling compliant operations.

How do you see the UK’s Financial Promotions Regime influencing other jurisdictions’ approach to crypto regulations?Theoretically, jurisdictional influence and collaboration make sense, as many markets will adopt similar models. However, we do not expect too much cross-border influence, as every jurisdiction deals with crypto differently based on its own social, financial, and political dynamics.

Specifically for the UK and the European Union, we know that the EU’s Markets in Crypto Assets regulation (MiCA) will have, in some way, a version of the financial promotions regime. Given the UK’s political isolationism post-Brexit and what that has done to bilateral relations, I don’t think Europe is in a mood to take a lead from the UK and vice versa.

The potential for the EU to be influenced by the UK is much more likely to come if they observe the effectiveness and shortcomings of the FinProm regime, which will have been implemented for the best part of a year before the full introduction of MICA. This will allow them to take a wait and watch approach and gain a second mover advantage learning from the FCA’s experience.

Are there any plans for future collaborations with other compliance experts or regulatory bodies to further enhance Ramp’s compliance framework?

We support CryptoUK and the EMA, and we recognise the forward-thinking regulators in major regions like the UAE and Singapore. These collaborations help us enhance our compliance framework.

Over the next five years, we anticipate a varied regulatory environment, with some markets over-regulating and others under-regulating. Our goal is to operate in the compliance sweet spot where regulation and innovation coexist.