‘The Upside is Huge’: TradFi Talent Flocks to Crypto

They’re ditching cushy jobs at blue-chip investment banks and top-tier law firms. They’re bidding Silicon Valley goodbye. And in some cases, they’re coming out of retirement.

The great migration from the upper echelons of the corporate world to the crypto economy has been building for years and is expected to accelerate now that Wall Street firms have paid out their bonuses, 15 industry participants told Blockworks.

“It’s absolutely happening, and it’s happening at a super fast pace,” said Frank van Etten, chief investment officer at digital assets lender Celsius. After 20 years in traditional finance, van Etten went all in on crypto last September.

Since then, a few hundred people from his old business circles have reached out to van Etten, all curious about what it takes to get a job in crypto.

“There are about a dozen people I’m lining up to bring in [to Celsius], and about three or four senior people are literally coming out of retirement to work in crypto,” he said. “For people in my stage in my career, if you want to achieve something more, crypto is the right environment to do so.”

Crypto companies, now flush with venture capital cash, are divvying out comparable compensation to Wall Street peers for the first time — not to mention equity.

The digital assets space now offers “higher potential upside” than traditional finance firms, one source at an investment firm said. The source and others not authorized to speak on the record were granted anonymity.

“The industry has matured and now offers comparable salaries with more potential for significant equity in the firm, and therefore, higher potential upside,” the source said. 

Brooks Wallace, head of communications for Blockchain.com, said after financiers collect their hefty annual bonus, the crypto exodus will only intensify — calling it a “great migration.”

A large percentage of Blockchain.com’s team — and virtually all of its growing institutional division — began their careers in traditional finance, working for firms like Citadel, Credit Suisse, Deutsche Bank, Goldman Sachs and UBS.

Crypto exchanges led the charge last year. Collectively, Coinbase, Binance, Kraken, BlockFi and Gemini added almost 5,000 new employees, according to a report by The Pomp Letter. 

Jonathan Tamblyn, director of talent acquisition at Gemini, said about a third of the exchange’s talent comes from traditional finance. The firm, Tamblyn said, places “a lot of value” on traditional training because “it’s an industry we hope to change and evolve in the future.”

One source working for a top global capital markets firm noticed the exodus about a year ago and said top banks like Goldman Sachs and Morgan Stanley are losing “so many people to crypto.”

“There are lots of arbitrages going on between TradFi and DeFi,” a hedge fund analyst told Blockworks. “One of the most overlooked components is the arbitrage between the value in labor. Employees working in operations roles in TradFi are largely commoditized, underpaid and overworked. In DeFi, the market structure is very inefficient, which puts pricing power on salaries for those roles willing to dive into the minutiae to make things more efficient.”

This arbitrage is causing “brain drain” from traditional finance operations and causing back office settlement problems as prime brokerages are underpaid and understaffed, the hedge fund analyst said. 

“So, we are staring down the barrel of a giant arbitrage of two financial systems: one which is way faster and pays their employees to stay ahead of inflation, and the other that is way slower and keeps cutting corners on head count in operations,” the analyst said. “This battle in the back offices is like the difference between dial up internet and cable or the fax machine and email.”

What started in traditional finance has spread to other white-collar industries. 

Katherine Dowling, for example, moved on from a long-time career in financial law to be a general counsel member and chief compliance officer for Bitwise Asset Management in September. Separately, four ex-Facebook developers quit their jobs and banded together to create a Web3 and blockchain-focused company.

As of Feb. 2, LinkedIn listed over 44,000 US-based jobs with the keyword “crypto” or “blockchain.” According to data from LinkedIn’s Economic Graph, US job postings with those keywords grew 615% from August 2020 to August 2021.

“The fact that the crypto industry often appears like an exciting new frontier, combining elements of the tech sector with the interesting parts of finance and a fun, young vibe…huge amounts of energy, talent and momentum are attractive,” the investment firm source said. 

But why are people leaving? In pursuit of money, innovation, purpose or a little bit of all three, crypto players said.

The talent transitioning into crypto isn’t surprising, given how traditional finance backgrounds offer a natural stepping stone to crypto, appealing to candidates who want to be part of building the future of finance, Miller said.

“I don’t think anyone can say there’s no migration,” the capital market source said. “But why do they do it? Money, money, money and the upside is huge. But what’s the downside? Maybe it doesn’t work out.”

As Web3 grows, ambitious people in technology and finance are taking note, Charlie Silver, CEO of Permission.io said. His company, which focuses on digital ownership in Web3, has recently hired people from Google, Microsoft and Facebook.

“Upside potential in Big Tech and big finance are very limited,” Silver said. “For ambitious creatives, these [traditional] companies are more like working for the federal government.”

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