Despite the BTC sell-off and a significant drop in total value locked (TVL), talent is migrating from traditional finance to the crypto space. Among the most notable names that are Katia Babbar and William McGhee.
Babbar is the former Managing Director as well as Head of Electronic FX trading at Lloys Bank (London). McGhee was the senior quantitative researcher at Citadel Europe. He was also the Global Head of Quantitative Analytics and Global Head of Machine Learning for electronic trading at NatWest Markets.
Both executives launched a risk management system for cryptocurrencies and decentralized finance (DeFi) called Immersive Finance.
Andrei Serjantov, an executive that served BNP Paribas for the past 16 years left the group to join Nym (crypto startup) as its Chief Financial Officer (CFO). Serjantov was the Head of Electronic Credit Trading and Head of Flow Credit Quantitative Research at BNP Paribas.
Even the World Economic Forum (WEF) is seeking talent to 'lead the project management of blockchain and digital assets workstreams'.
“As part of the C4IR, the Blockchain & Digital Assets platform focuses on these and related topics, including crypto, CBDCs, stablecoins and Web 3.0, among others.”
Web 3 is also drawing talents from multiple sectors in the industry, which is not restricted to finance.
CFTC Chair Says Crypto Will Be Part of American Portfolio
The CFTC Chair, Rostin Benham said in a recent webcast, hosted by Future of Crypto Regulation at the Brookings Institution that crypto will be a dominating part of the American portfolio.
“We are here today because digital assets are trending towards becoming a part of mainstream American portfolios, with surveys and polls demonstrating that as many as one in every five adults has invested in or otherwise used cryptocurrency.”
Benham also revealed that retail traders are highly active in the Bitcoin futures market:
"Recent CFTC studies find that trading indicative of retail participants makes up approximately 25% of long open interest in the Bitcoin futures market, which is significantly higher than is generally observed in other futures markets, such as corn, soybeans, wheat, WTI crude, gold and S&P E-mini futures, where retail long open interest ranges from 5% to 11%.
"These studies suggest the amount of retail participation in the digital asset futures market is more than double that in other futures markets."
Moelis Enters the Blockchain
Moelis & Company, an independent investment bank announced on Monday that it is entering the blockchain. Lead by John Momtazee, the global blockchain team will be composed of senior bankers.
Navid Mahmoodzadegan, the Co-Founder and Co-President of Moelis & Company, said: “Technological innovation and disruption have been major drivers of transaction activity globally, a trend that will continue to shape the business landscape."
A study by forexsuggest revealed that Switzerland is the top country for blockchain startups.
source: forexsuggest
14 startups in Switzerland are worth over $1 billion.
Executives from the traditional FX industry have been turning to crypto. Trading platforms that are integrated into the blockchain or blockchain solutions that replace the traditional methods have raised significant capital, which has caught the eye of many in the industry.
The tokenization of carbon credits, stocks and lending/borrowing the blockchain offers innovative solutions to multiple sectors. In the financial industry, DeFi projects are currently the most attractive.
As many companies are stepping into decentralized crypto trading, the competition is rising. As a result, demand for talent from traditional finance is increasing.
Talent Will Leave for Crypto
Layoffs across crypto exchanges are continuing. Banxa, an Australian cryptocurrency exchange announced it is shrinking its team to 150 employees from 250. Its European Managing Director, Jan Lorenc will also be departing from the company.
However, venture capital is continuing to maintain a high interest in the blockchain. Steven Alexopoulos, an analyst at J.P. Morgan wrote the following: "While many of the ‘traditional’ sectors including software and pharma & biotech continued to represent the majority of VC investment activity in 2022, one of the most interesting trends we have observed in recent quarters has been the record pace of VC investment into startups in the crypto and blockchain industries."
According to JP Morgan, the year-to-date invested capital in crypto and blockchain came in at $17.9 billion (as of 14 July). In Q2 2022 VC invested $7.9 billion, which is lower than the $9.8 billion in the first quarter.
Nevertheless, JPMorgan highlights that the $7.9 billion in Q2 is more than all of the investments in crypto startups in 2020 (which stood at $6.5 billion).
“Consequently, the flow of capital into private startups, in our view, should persist across many segments including … crypto/blockchain," added Alexopoulos.
Trade Republic raising $1.2 billion at a $5.3 billion valuation is among the biggest deals in the recent quarter.
The migration from traditional finance to crypto may pick up the pace. In the event ETH recovers following the anticipated merge (expected in September), VC investments may increase in tandem with mass desertion from traditional finance to the blockchain industry.
What Blockchain Industries May Thrive?
According to the European Commission blockchain funding and investment, the focus in recent years was on the following sectors:
e-identity and decentralized data management,
healthcare and education,
privacy and cybersecurity,
IoT and smart homes, grids and cities,
music and media,
industrial technologies,
environment and circular economy.
source: European Commission
While DeFi garners most of the attention, other sectors may prevail in the months to come. Under the assumption the crypto markets will recover from the recent sell-off, investors may turn their attention to crypto insurance companies.
AML solutions and digital identities enjoy greater exposure as we near the first implementation of MiCA regulations.
Crypto Valley Venture Capital (CV VC) invested in African blockchain startups, saying the African crypto market is growing at a rapid pace. Among CV VC investments was HouseAfrica in Nigeria.
The startup is allowing property registrations to take place at the blockchain, efficiently reducing the required time for banks and lawyers to register the land titles.
Retaining Crypto Talent Is Also Challenging
José Manuel Campa, the Chair of the European Banking Authority (EBA) recently said that retaining cryptocurrency experts will be a challenge. As demand for crypto experts increases, higher wages may be offered by both the private and public sectors.
As a result, the EBA is concerned it will struggle with hiring crypto professionals given the growing demand for experts in the public and private sectors. Campa suggested that many industry experts could be more drawn to positions paying wages higher than those at the EBA, which were comparable to government jobs in the European Commission.
Robert Cook, the President and CEO of FINRA, adopted a more creative approach. As US crypto exchanges were cutting their staff, Cook said employees that fear losing their job should come and work for the US regulator.
Approximately a third of blockchain-related jobs are remote. Companies have a greater reach by offering remote positions, which in a sense is what the decentralisation of the blockchain industry strives to introduce.
