Welcome to Future of Finance, where Fortune asks prominent people at major companies about their jobs, how their firm fits into the crypto ecosystem, and what it all means for how we use money.
In June, Lindsey Argalas ascended to the CEO position at crypto compliance and reporting company TaxBit after a stint as its chief operating officer. Since then, she has worked to help crypto companies and traditional tech companies like PayPal, Google, and Fidelity experiment with blockchain and crypto in a compliant way.
Fortune caught up with Argalas to discuss, among other things, how companies in Web3 have a newfound appreciation for transparency and visibility in the wake of FTX’s collapse—and founder Sam Bankman-Fried’s ongoing trial.
(This interview has been edited for length and clarity.)
Can you tell me about how you first started in the blockchain/crypto industry?
I’ve worked the majority of the last 15 years in FinTech, so technology and financial services. The first big block of that was at Intuit, so 10 years in tax and accounting software, but helping consumers and small businesses with their financial lives. Then I spent several years at Santander as the chief digital and innovation officer, taking all of that experience I had from Intuit and Silicon Valley and building amazing software and digital experiences for consumers and small businesses and doing that on a huge scale.
While I was there, I had responsibility over payments, digital and mobile channels, Blockchain, data, AI, launching new fintechs. Anything that was the kind of modern, new experiences in our technology platforms was under my scope of responsibility. It was a really neat opportunity to kind of use everything that I had learned at Intuit, launching global technology platforms but at the same time doing that in a very regulated environment across multiple jurisdictions—in Europe and Latin America, as well as North America.
I really developed a conviction for blockchain when I was there. Coming from Silicon Valley, from a software company, I was shocked at how money moves around the world, and how outdated, frankly, the financial infrastructure is. When you see the potential of blockchain around how it can help money move across borders, in real time, much more efficiently, there are a lot of use cases in financial services. That's where I really got very excited about this space in general. I really wanted to devote my time and career to helping unlock this next wave of innovation in the space. I joined TaxBit about 18 months ago.
How has it been transitioning from COO to CEO at TaxBit?
It's been a very natural evolution, which is obviously a good thing. I have a great partnership with Austin [Woodward], who was the former CEO and founder, and he continues to be involved in an executive chairman role. I feel very supported. I think many of the prior roles that I had either at Intuit or Santander were also very broad in scope, very cross-functional. And so the role that I'm currently in feels very natural because of the experiences that I had previously.
At Santander, you were more focused on the cutting edge, which included some blockchain projects, but was there ever a clash between that and the TradFi culture there?
I think it's very easy for people on the outside to criticize the large financial institutions as slow, conservative—they have all this friction in the customer experience. There are reasons why that is the case, and I have a much greater appreciation of that. The regulators are obviously very rigorous in their supervision over these large financial institutions, particularly the ones that can pose systemic risks. There’s a lot at stake.
Our chief risk and compliance officer—we joked around, but I had a very good relationship with him—their job was obviously to make sure that everything we were doing was safe. And the risk tolerance, of course, was much lower than a FinTech or a much earlier stage company can afford. So that's the constant tension. We would show oftentimes to regulators that this was completely ring-fenced so that there wouldn't be any jeopardy of getting a data breach on the core bank. We had 115 million customers across multiple countries, and that is, again, a tremendous responsibility. As a result, you know, you've got to make sure that the new, cool things you're doing don't put that core business in jeopardy.
You see a lot of people hiring talented, experienced leaders from the financial services or other regulated sectors, because it's about that balance. It's not just about using the cool tech, building the best thing and having this beautiful customer experience—it is also about doing it in a safe and compliant manner.
Has there been any benefit to TaxBit after the collapse of FTX or other companies in the crypto space?
The early adopters of our software—we also do tax and accounting software for enterprises and government agencies that deal with digital assets—were the crypto exchanges, many of which did not have the proper controls in place. They didn't have either the right talent or the right tools, even if they were maybe using us for part of their business. That, frankly, has been a challenge to parts of the business. On the flip side, people now appreciate the importance of having transparency, visibility, having a good sense of what the financials look like—or having books that can be auditable. That has been a really important realization and maturation for the industry, and obviously that bodes well for compliance software.
Have you seen any of your clients, or companies that you've talked to, be more hesitant toward crypto- or blockchain-based projects?
We have not seen a big change from our existing clients retrenching. But they are reinforcing the controls they have in place to make sure that they are compliant, that they have the visibility, that they understand what's going on. So that's one. Two, we talk to many, many companies in the industry that have very sizable teams working on crypto-tokenized assets and various blockchain-related initiatives. That has not subsided. What we do see is that they have been reluctant to put those out in the market in absence of regulatory clarity in the United States. I think we are getting clarity, slowly but surely, on some pieces.
If you had a regulatory wishlist, what would be at the top regarding digital assets?
First of all, there's kind of a hierarchy of clarity that's needed. At the top it starts with, “What is a digital asset?” In our case, where we do tax and information reporting, “Who is a digital asset broker that is subject to these rules?” and “What are the use cases that are subject to certain pieces of regulation?” and then “Who is overseeing that?” There are a series of really foundational questions, starting at the top. We're starting to get some good clarity. Europe, obviously, has MiCA. The U.S. has some proposed regulation. Brazil, Singapore—we're starting to see some key markets put regulation out and start providing some clarity on those things.
The people who are engaging right now in digital assets want to be compliant. They generally do. Maybe 18 to 24 months ago, it was like, “Don't regulate us, let the innovation flourish.” Everyone now realizes the negative consequences of not having some of these things in place.
When it comes to emerging markets, is crypto going to become even more important?
At Santander, again, we were very strong in Latin America, and so a lot of our blockchain-related efforts were focused on Latin America. There are some real pain points. Not only do you have a financial-inclusion issue in Latin America, where much of the continent is still underbanked, you also have real pain points around currency volatility, currency controls. In a lot of those economies, people are already taking a lot of actions to swap out their home currency for dollars. When they have access to a U.S. dollar-backed stablecoin, for example, that's a real pain and need that's addressed in those economies. As we know, a lot of these countries, too, in emerging markets are big remittance corridors—think about U.S.–Mexico. There is a lot of inefficiency, time delays, fees, intermediaries, to transfer money across borders. I think there's real power and potential behind stablecoins as a means to let money flow.
The examples I just gave you were on the retail or the individual side. Let me tell you another one that we were focused on at Santander, and I see a lot of the large financial institutions focus on, which is serving multinationals—wholesale settlement, liquidity management, how you move funds around from country to country. When the current financial system operates Monday through Friday, 8 to 5, there's a lot of capital that is tied up because it operates on this antiquated system. And so, again, blockchain unlocks a ton of potential.
What do you want people to know about TaxBit that they don't already?
We're super committed and focused on helping the industry adopt digital assets in a compliant way. We feel that—particularly with many examples of people who have been very publicly penalized for not doing things the right way—compliance is one thing that is getting in the way of companies adopting digital assets and unlocking the power and the potential of the technology.
How is the company reorganizing after laying off nearly 40% of its employees in June?
That was a very thoughtful and proactive—albeit a very difficult—measure to take, as you might imagine. We have raised a lot of money—we still have a significant and very healthy cash balance. However, we didn't feel that the prior investment levels were reflective of the time horizon of the market. Clearly, the market was set back by the incidents of last year, and we had to correct for that. We were continuing to build for very fast adoption from companies. I'm so proud of what our teams have built. We have an amazing product, right? But the reality is, people have become more cautious. Things have slowed down. And so it was really important for us to align the investment levels with the realities of the market.
What do you think is the future of finance?
Goodness, that's such a broad topic. I love it. That can probably be an hour-long conversation. There are maybe two perspectives, I would offer. One, I'm a big believer in partnership between the large players and the innovative FinTechs and startups. There are beautiful, magical things that startups are doing. I love it. To the conversation earlier, they can take more risks, they can push the needle, they start from a clean sheet. They don't have any tech debt. That is a beautiful thing. At the same time, the large financial institutions have amazing brands, trust, distribution. If you look at the money flows and the percentage of the global economy they power, it is extensive. And so you're starting to see a lot more of this collaboration.
Historically, the large companies, because they have a magnitude of resources, would do nearly everything in-house, but they are starting to be much more open-minded to working with FinTechs and startups. I think clearly now, in this kind of market environment, I think the startups also realize there is real merit in working with some of these large players—and that it’s a great way to get a lot more people using their services.
The second trend is, financial services are going to evolve over the next decade or 20 years with the convergence of traditional assets and digital assets. The large financial institutions, I see them investing fairly extensively in blockchain, in tokenizing assets. This is not going to happen overnight. This will take many, many years, particularly when you just look at the scale that these large financial institutions have—and just the sheer size and scale of the global economy. But it's really important that you're seeing, even from a consumer perspective or from companies, demand that, yes, they have traditionally operated with fiat currencies or traditional assets, but there is real interest, not only in crypto, but in other kinds of tokenized versions of those assets.
