Bankers Quitting Crypto Don’t Regret Collapse: ‘I’ve Never Looked Back, Not a Day’

Bankers who abandoned traditional financing to take advantage of the digital asset boom were instead greeted by another “crypto winter”.

Former employees of JPMorgan, Goldman Sachs and Citigroup were among those affected as crypto exchange Coinbase slashed 1,100 positions and moved 300 job openings, while Gemini, and BlockFi took action. Prices also fell and economic conditions deteriorated. booming industry.

But some senior bankers who took the leap in the past year say they don’t regret it. This isn’t about “HODL” or “buying the dip” — terms used by crypto evangelists when prices fall — but about a longer-term confidence in crypto and the belief that the industry needed a turnaround, according to four people. who jumped into space.

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“I’ve never looked back, not a single day,” said Kyle Downey, who left a 17-year career at Morgan Stanley in October to found Cloudwall Capital, a New York-based fintech firm that builds risk management for digital assets. . system.

Chris Perkins left Citigroup, where he led a team of approximately 725 people last September as co-head of futures, clearing and FX brokerage. He is now chairman of crypto investment firm CoinFund, which has just hired a new global talent manager to help it navigate its next growth phase.

Perkins said he didn’t want to sound “deaf” to crypto problems, but added that the industry has gone through “many cycles”.

“We strongly believe that there is a material opportunity in this space,” he said. “In a bear market cycle, this is the perfect time to lay your head down and build up. Good companies will emerge with a solid foundation.

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In an email to staff announcing the job cuts, Coinbase CEO Brian Armstrong said “we appear to be entering a recession” and that it could lead to a “crypto winter”. The company, which grew to 6,000 employees from 1,250 in early 2021, has grown too fast, he added.

Crypto lender Celsius Network hired restructuring lawyers on June 15 in an effort to solve its financial problems after it frozen client withdrawals.

But as rivals cut spending, crypto platforms Binance, FTX and Kraken all said they would continue to rent. Binance will hire an additional 2,000 employees, according to its CEO, Changpeng Zhao, who is in a Tweet of June 15 stating it was a “bloodbath” there† “Squat. Make sure you can hold it.

Sebastian Widmann, who spent four years in the digital asset team at Japanese bank Nomura before leaving in September to become head of strategy at Komainu, the custodian of digital assets, said the company is still targeting 100 people by the end of the year. years, but this could be accelerated or decelerated depending on market conditions.

“The story around digital assets has not changed. Each cycle creates an opportunity to rebuild 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 set rules to govern. As a regulated depositary of digital assets built by institutions for institutions, this is a positive for us.

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Arianna Luna launched Campsor Capital, a market neutral crypto hedge fund in April, after approximately 11 years in banking functions. The current volatility and “dislocation” in the market has helped the fund monetize, she said, although it is currently “hard to navigate” 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 allocations even though there is more scrutiny 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 with the pace of adoption within their own organizations, feared missing out on an upcoming boom, while others sought a big payday in an industry where six-figure starting salaries were slightly higher than banking.

At the same time, banks such as JPMorgan, Goldman Sachs and Citigroup have created new digital asset teams to tackle the sector in anticipation of greater institutional adoption. With the decline of crypto assets, some employees are choosing to stick with what they know.

One trader, who said he was considering joining a crypto trading company, instead decided to stay with his current employer to work on their digital asset team. A US bank employee whose bid was withdrawn by a crypto firm said he now wants to stay in banking, while another said he was taking a break and “weighing my options”.

“I still get questions every day from people in commercial roles,” says Perkins. “For people who have descended the rabbit hole of crypto, the opportunities remain, even if they are not immediate in some cases. We are long-term investors and we look to the horizon.”

Downey said his company is fully funded and that “all hires have been completed.” He is “100% ready to build the business”. He said conversations with crypto hedge funds, start-ups and banks are leading people to ask “when will it come back” rather than “if” as happened during the latest crypto crash in 2017.

“There is a suspicion that this is a correction and that the market and ecosystem will come back stronger,” he said. “It may take a while, or it may bounce back quickly as it happened after March 2020: no one can say for sure. But it will come back strong, I’m pretty sure.”

Perkins and Widmann said the current crisis will prompt regulators to act against crypto, benefiting companies looking to bridge the gap between traditional finance and the so-called defi sector.

“There are two winds: regulatory risk mitigation and institutional adoption,” Perkins said. “Our job now is to build a rock-solid foundation for when market conditions improve.”

“In a situation like this, whoever can hold their breath the longest under water wins big,” Downey added.

If you would like to contact the author of this story with any comments or news, please email Paul Clarke

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