Bankers abandoning major finance to capitalize on the digital asset boom have been greeted with a new “crypto winter”.
Former JPMorgan, Goldman Sachs and Citigroup staff were among those affected as the Coinbase cryptocurrency exchange cut 1,100 jobs and canceled 300 job openings, while Gemini, Crypto.com and BlockFi also reduced prices as they fell and deteriorating economic conditions affected the above. booming sector.
But some senior bankers who have made the change over the past year say they do not regret it. This is not a case of “HODL” or “buy the dive” – terms used by cryptographic evangelists as prices fall – but the long-term faith in cryptography and the belief that the industry needed a shake-up, according to four people who jumped into space.
“I never looked back, not a day,” said Kyle Downey, who left behind a 17-year career at Morgan Stanley in October to launch New York-based Cloudwall Capital, a fintech company that has built a risk management system. digital assets.
Chris Perkins left Citigroup, where he led a team of about 725 people as co-head of futures, clearing and foreign exchange brokerage, in September last year. He is now chairman of cryptocurrency investment firm CoinFund, which has just brought in a new head of global talent to help in its next phase of growth.
Perkins said he did not want to sound “deaf” to the problems affecting cryptocurrencies, but added that the industry has gone through “numerous cycles.”
“We are very convinced that there is a material opportunity in this space,” he said. “In a bearish market cycle now is a good time to lower your head and build. The right companies will come out of this with a solid foundation.”
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In an email to staff announcing job cuts, Coinbase CEO Brian Armstrong said “we seem to be entering a recession” and that it could lead to a “cryptographic winter”. The company, which grew from 1,250 in early 2021 to 6,000 employees, has expanded too fast, he added.
Cryptocurrency lender Celsius Network hired restructuring lawyers on June 15 to try to resolve its financial problems after freezing customer withdrawals.
But as rivals have shrunk, cryptographic platforms Binance, FTX and Kraken have said they will continue to hire. Binance will hire another 2,000 employees, according to its chief executive Changpeng Zhao, who said in a statement June 15 tweet saying it was a “bloodbath”. “Crouch down. Make sure you can last.”
Sebastian Widmann, who worked on the digital asset team at Japanese bank Nomura for four years before leaving in September to become chief digital strategist at Komainu, said the company still aims to grow to 100 people. at the end of the year. year, but this could accelerate or slow down depending on market conditions.
“The narrative around digital assets has not changed. Each cycle creates an opportunity to rebuild better and will cause some bad market players to give up, while reinforcing legitimate projects,” he said. the ecosystem in general. As a regulated digital asset custody built by institutions for institutions, this is positive for us.
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Arianna Luna launched Campsor Capital, a market-neutral cryptocurrency hedge fund in April after nearly 11 years in banking. Current volatility and “dislocation” in the market have helped the fund make money, although it is currently “difficult to navigate” and some peers are falling.
“Investors who have never invested in crypto are asking more and more questions, but funds with a presence in the sector are moving forward with allocations, although there is more scrutiny in the due diligence process,” he added.
Are you stuck with ‘tradfi’?
Over the past year, more bankers have abandoned traditional financial roles for crypto. Some, frustrated by the pace of adoption by their own organizations, feared losing an impending boom, while others were looking for a big payday in a sector where initial six-figure wages were slowly advancing over bank offers.
At the same time, banks such as JPMorgan, Goldman Sachs and Citigroup have been creating new digital asset teams to face the sector in anticipation of a more institutional adoption. With the fall in cryptographic assets, some employees choose to follow through with what they know.
One trader, who said he was considering moving to a cryptocurrency trading company, decided to stay with his current employer to work on his digital assets team. An employee of a U.S. bank that had an offer canceled by a cryptocurrency company said they now intend to stay on the bench, while another said they were taking a break and “weighing my options.”
“I’m still getting inquiries from people with tradfi roles every day,” Perkins said. “For people who have gone through the burrow of cryptography, the opportunities are still there, although in some cases they are not immediate. We are long-term investors and we look to the horizon.”
Downey said his company is fully funded and that “all hiring is complete.” He is “100% a go to build company”. He said talks with cryptocurrency hedge funds, start-ups and banks make people wonder “when will he return” instead of “if”, as happened in the last cryptocurrency crash in 2017.
“There is a presumption that this is a correction and that the market and the ecosystem will become stronger again,” he said. “It could take a long time, or it could recover as quickly as it did after March 2020: no one can say for sure. But it’s coming back big, I’m pretty sure of that.”
Perkins and Widmann said the current crisis would push regulators to take action on cryptography, which would benefit companies looking to bridge the gap between traditional finance and the so-called defi sector.
“There are two tailwinds: eliminating regulatory risks and institutional adoption,” Perkins said. “Our job now is to build an iron base for when market conditions improve.”
“In one situation, whoever can hold their breath underwater the longest is winning big,” Downey added.
To contact the author of this story with comments or news, please email Paul Clarke