WASHINGTON, July 22 (Reuters) - Cryptocurrency startup Solidus Labs has hired the former director of the U.S. Consumer Financial Protection Bureau (CFPB) as its top regulatory official, she told Reuters. Kathy Kraninger is the latest former Trump administration official to land in the booming digital currency industry as it beefs up on legal expertise and Washington connections amid increasing regulatory scrutiny. Founded in 2017 by former Goldman Sachs employees, New York-based Solidus Labs provides cryptocurrency trading surveillance and risk monitoring tools. Its backers include private equity firms Evolution Equity Partners and Hanaco Ventures. Kraninger will lead and build out Solidus Labs" regulatory team, spending most of her time working with regulators, U.S. lawmakers and traditional institutions to explain how digital markets can be effectively policed, she said in an interview. Her career in government, including helping to set up the Department of Homeland Security and leading the CFPB from 2018 to 2021, positions her to contribute to a growing debate in Washington over how to regulate cryptocurrencies, she said. "Bringing the expertise that I have from how federal regulators think, state regulators think ... it just seemed to be a fantastic fit," said Kraninger. Solidus Labs has built software to monitor crypto markets and help investment firms and other clients screen for manipulation, bad actors and meet compliance obligations. Its clients include crypto exchange Bittrex and Rialto Markets. The ability to monitor cryptocurrencies has become a major worry for regulators as the ballooning market, which reached a record $2 trillion capitalization in April, has experienced wild volatility. In June, the Securities and Exchange Commission (SEC) again delayed approving a bitcoin exchange traded fund and sought feedback on the risks of market manipulation. read more This month, Senator Elizabeth Warren called for increased cryptocurrency oversight, while Treasury Secretary Janet Yellen told regulators they must quickly establish rules for digital coins linked to fiat currencies, known as stablecoins. Regulators worry the cryptocurrency market is unstable, opaque and systemically risky. read more "We"ve had overwhelming interest from regulatory entities globally," said Solidus Labs Chief Executive Asaf Meir. "We needed someone who brings in the right experience." Crypto and fintech companies have been snapping up former Trump regulators. Former bank regulator Brian Brooks was appointed Binance"s U.S. CEO in May, while Chris Giancarlo, former chair of the U.S. derivatives regulator, is an investor in Solidus and founded the Digital Dollar Project which advocates for U.S. policymakers to develop a digital dollar.