Downside Only

Austin Campbell
8 min readFeb 16, 2023
Photo by Aaron Burden on Unsplash

American Regulators Have a Hard Job

I’ve made some comments critical of regulators recently, as I think it’s important to be intellectually honest. Despite this, I have some people I am privileged and honored to call friends at places like the Federal Reserve, CFTC, and NYDFS. They aren’t perfect (who is — certainly not me!), but I think they genuinely care about trying to get things right. They don’t always achieve that, but I want to be clear I’m not a conspiracy theorist who thinks the entire regulatory space is motivated by animus against humanity.

That’s not to say everything is perfect (quite the reverse, in some ways). I don’t want people to miss the fact that there are some underlying structural problems facing both US regulators and, to be blunt, the entire US financial system that ultimately require a bit of thought. But we also need to be fair about what is going on here.

I want to start with three key points about the position that most regulators are in to help educate the crypto community about why things are going the way they are.

Regulators are Underpaid and Understaffed

Do you know people at the CFTC are paid? Hint: it’s not a lot relative to financial services or law in general. How about the SEC? Hint: it’s also not a lot relative to financial services or law in general.

Put differently: there’s likely at least one second year analyst or something at a combination of JPM / Goldman Sachs / Morgan Stanley who made more money than the highest paid person at any of the agencies I just referenced.

Think about that for a moment. Some 20 year old kid, who has one year of experience and was trading pokemon cards or something before showing up at a bank, earns more than our highest paid civil servants.

This creates some problems: talent retention and attraction are difficult, morale often sucks, and the people you get either are there for non-monetary forms of compensation (status, prestige, profile, or just caring about doing the right thing), or you get low performers who are lazy. That’s not a specific comment about any agency, that’s a statement about what that kind of pay disparity does.



Austin Campbell

Austin is a Columbia Business School professor, has run one of the top 3 stablecoins, and has decades of experience trading profoundly weird financial stuff