Bankers leaving traditional funding to take advantage of the digital asset boom have instead been greeted by a new “crypto winter.”
Former employees of JPMorgan, Goldman Sachs and Citigroup were among those affected when the cryptocurrency exchange Coinbase cut 1,100 jobs and canceled 300 job postings, while Gemini, Crypto.com and BlockFi took action, also reduced falling prices and worsened economic conditions. thriving sector.
But some senior bankers who have taken the plunge in the past year say they have no regrets. This is not about “HODL” or “buying dip” – terms used by crypto evangelists as prices fall – but about a long-standing belief in crypto and the belief that the sector needed a turnaround, according to four people who jumped out into space.
“I’ve never looked back, not a single day,” said Kyle Downey, who left a 17-year career at Morgan Stanley in October to start Cloudwall Capital, a New York-based fintech company building digital asset management system.
Chris Perkins left Citigroup, where he led a team of about 725 people as co-head of futures, clearing and FX brokerage, last September. He is now chairman of the crypto-investment firm CoinFund, which has just recruited a new global talent manager to help it with its next growth phase.
Perkins said he did not want to sound “deaf” to crypto problems, but added that the industry has been through “many cycles”.
“We are very convinced that there is a significant opportunity in this space,” he said. “In a bear market cycle, this is the perfect time to lay your head down and build. Good companies will emerge with a solid foundation.
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In an email to staff announcing job cuts, Coinbase CEO Brian Armstrong said “we look set to go into a recession” and it could lead to a “crypto winter.” The company, which has grown to 6,000 employees from 1,250 at the start of 2021, has grown too fast, he added.
Crypto lender Celsius Network hired restructuring lawyers on June 15 in an attempt to solve its financial problems after it froze customer withdrawals.
But as rivals cut spending, cryptocurrencies Binance, FTX and Kraken all said they would continue to hire. Binance will hire an additional 2,000 employees, according to its CEO, Changpeng Zhao, who said in a Tweet from June 15 and said it was a “bloodbath there”. “Sit down. Make sure you can endure.
Sebastian Widmann, who worked in the Japanese bank Nomura’s digital assets team for four years before leaving in September to become chief strategy officer at digital depository company Komainu, said the company still aims to reach 100 people by the end of the year, but this may be accelerated or slowed down depending on market conditions.
“The story of digital assets has not changed. Each cycle creates an opportunity to build back better and will cause some bad market players to leave while strengthening legitimate projects, ”he said. “Regulators have become more aware of the digital asset space and are more likely to act to establish rules to govern. As a regulated digital asset repository, built by institution after institution, this is positive for us.
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Arianna Luna launched Campsor Capital, a market-neutral crypto-hedge fund in April after about 11 years in banking roles. The current volatility and “dislocation” in the market has helped the fund make money, she said, although it is “difficult to navigate” right now, and some peers are tumbling.
“Investors who have never invested in crypto are asking more and more questions, but funds in the sector are still pursuing their allotments, even though there is more control in the due diligence process,” she said.
Stay with ‘tradfi’?
Over the past year, more and more bankers have abandoned traditional financial roles for crypto. Some, frustrated by the pace of adoption in their own organizations, feared missing out on an impending boom, while others sought a big payday in an industry where six-figure starting salaries were slightly ahead of offer.
At the same time, banks such as JPMorgan, Goldman Sachs and Citigroup have set up new digital asset teams to tackle the sector in anticipation of more institutional adoption. With the decline in cryptocurrencies, some employees are choosing to stick with what they know.
One trader who said he was considering joining a crypto trading company decided instead to stay with his current employer to work on their digital assets team. A US banker whose bid was withdrawn by a crypto company said he now aims to stay in the banking sector, while another said he took a break and “weighed my options”.
“I still get inquiries from people in commercial positions every day,” Perkins said. “For people who have gone down into Krypton’s rabbit hole, the opportunities are still there, even if in some cases they are not immediate. We are long-term investors and we are looking at the horizon.”
Downey said his business is fully funded and “all hiring has been completed.” He is “100% ready to build the business”. He said conversations with crypto-hedge funds, start-ups and banks make people ask “when will it come back” instead of “if”, as happened during the last cryptocurrency crash in 2017.
“There is a presumption that this is a correction and that the market and the ecosystem will come back stronger,” he said. “It may take a while, or it may return quickly, as it did after March 2020: no one can say for sure. But it will come back strongly, I’m sure.”
Perkins and Widmann said the current crisis will cause regulators to trade in crypto, which will benefit companies that want to build bridges between traditional finance and the so-called defi sector.
“There are two downsides – regulatory risk reduction and institutional adoption,” Perkins said. “Our job now is to build an iron-clad foundation for when market conditions improve.”
“In a situation like this, the one who can hold his breath the longest underwater wins big,” Downey added.
To contact the author of this story with comments or news, email Paul Clarke