Bankers who quit for crypto have no regrets amid meltdown: ‘I have never looked back, not one day’
Bankers quitting mainstream finance to capitalise on the boom in digital assets have instead been greeted with a new “crypto winter”.
Former staff at JPMorgan, Goldman Sachs and Citigroup have been among those hit as crypto exchange Coinbase cut 1,100 roles and rescinded 300 job offers, while Gemini, Crypto.com and BlockFi have also cut back as plunging prices and deteriorating economic conditions have battered the previously booming sector.
But some senior bankers who have made the switch over the past year say they have no regrets. This is not a case of ‘HODL’ or ‘buy the dip’ — terms used by crypto evangelists as prices plunge — but longer-term faith in crypto and a belief that the sector was in need of a shake-out, according to four people who have jumped into the space.
“I have never looked back, not one 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 firm building a digital asset risk management system.
Chris Perkins quit Citigroup, where he led a team of around 725 people as co-head of futures, clearing and FX brokerage, in September last year. He is now president of crypto investment firm CoinFund, which has just brought in a new global head of talent to help with its next phase of growth.
Perkins said he does not want to appear “tone deaf” to the problems hitting crypto, but added that the sector has gone through “numerous cycles”.
“We’re very convinced that there’s a material opportunity in this space,” he said. “In a bear market cycle now is a great time to put your head down and build. The right companies will emerge out of this with a strong foundation.”
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In an email to staff announcing job cuts, Coinbase chief executive Brian Armstrong said that “we appear to be entering a recession” and that it could lead to a “crypto winter”. The firm, which swelled to 6,000 employees from 1,250 at the beginning of 2021, had expanded too quickly, he added.
Crypto lender Celsius Network hired restructuring attorneys on 15 June in a bid to tackle its financial issues after freezing client withdrawals.
But while rivals have cut back, crypto platforms Binance, FTX and Kraken have all said they will continue to hire. Binance will hire another 2,000 staff, according to its chief executive, Changpeng Zhao, who said in a 15 June tweet that it was a “bloodbath out there”. “Hunker down. Make sure you can last.”
Sebastian Widmann, who worked in the digital assets team of Japanese bank Nomura for four years before leaving in September to become head of strategy at digital assets custodian, Komainu, said that the company is still aiming to grow to 100 people by the end of the year, but this could be either accelerated or slowed depending on market conditions.
“The narrative around digital assets has not changed. Every cycle creates an opportunity to build back better and will result in some bad market actors leaving, whilst strengthening legitimate projects,” he said. “Regulators have become more aware of the digital assets space and are more likely to act on establishing rules to govern the overall ecosystem. As a regulated digital asset custody 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 around 11 years in banking roles. The current volatility and “dislocation” in the market have helped the fund make money, she said, even if it is “difficult to navigate” currently and some peers are foundering.
“Investors who have never invested in crypto are asking more and more questions, but funds with a presence in the sector are still going ahead with allocations, even if there’s more scrutiny in the due diligence process,” she added.
Stay with ‘tradfi’?
Over the past year, more bankers have been quitting traditional finance roles for crypto. Some, frustrated at the pace of adoption within their own organisations, feared missing a coming boom, while others sought a big pay day in a sector where six-figure starting salaries were inching ahead of banking offers.
At the same time, banks including JPMorgan, Goldman Sachs and Citigroup have been establishing new digital assets teams to tackle the sector in anticipation of more institutional adoption. With crypto assets slumping, some employees are choosing to stick with what they know.
One trader, who said that he was considering a move to a crypto trading firm, has instead decided to stick with his current employer to work in its digital assets team. A staffer at a US bank who had an offer rescinded by a crypto firm said they are now aiming to stay in banking, while another said they were taking a break and “weighing my options”.
“I’m still getting queries from people in tradfi roles every day,” said Perkins. “For people who have gone down the rabbit hole of crypto, the opportunities remain, even if in some cases they’re not immediate. We’re long-term investors and we’re looking to the horizon.”
Downey said that his firm is fully funded and “all hiring is complete”. He is “100% a go to build the company”. He said that conversations with crypto hedge funds, start-ups and banks have people asking “when it will come back” instead of “if,” as happened in the last crypto crash in 2017.
“There is a presumption that this is a correction and the market and ecosystem will come back stronger,” he said. “It could be quite some time, or it could bounce back quickly as happened post-March 2020: no one can say for sure. But it’s coming back in a big way, of that, I am quite certain.”
Perkins and Widmann said that the current crisis would spur regulators into acting on crypto, which would benefit firms looking to bridge the gap between traditional finance and the so-called defi sector.
“There are two tailwinds — regulatory derisking and institutional adoption,” said Perkins. “Our job now is to build an ironclad foundation for when market conditions improve.”
“In such a situation, whoever can hold their breath underwater longest stands to win big,” added Downey.
To contact the author of this story with feedback or news, email Paul Clarke