There’s a first-of-its-kind trend happening right now on Wall Street. Top executives from the world’s leading multinationals, including the Big Four, are showing signs of a mass exodus from old-school investment banking and consulting for a chance to join the blockchain startup movement.
In June, Matt Huang, Capital Partner of Sequoia, announced that he would be leaving the venture capital firm to create a cryptocurrency fund. The news follows J.P. Morgan Chase’s Blockchain Executive Amber Baldet leaving the banking conglomerate in April to found the decentralized app store Clovyr and Chris Matta, who left his role as a Vice President of Goldman Sachs to start a crypto asset management firm.
I include myself as part of this trend, having led blockchain coverage at Jefferies Technology Investment Banking. I have now launched the Strategic Advisory Group at blockchain professional services firm Wachsman, along with Franklin Bi, former Vice President and Blockchain Strategy Lead at J.P. Morgan.
It’s a transition that has industry experts and skeptics alike wondering: Why? While questions and uncertainty are still a big part of any conversation about cryptocurrency and blockchains, we’re starting to see formal classifications of crypto assets and exchanges, and government agencies, from the United States, to Japan, to the European Union, are beginning to clarify their positions on the future viability of the industry, even going so far as to recognize blockchain for its unique ability to provide security and transparency to a wide variety of use cases. The conversations are continuing, but their tone is shifting.
The U.S. Securities and Exchange Commission (SEC) is an excellent example of this. Having historically taken an outwardly pessimistic stance on domestic and international cryptocurrency regulation, the SEC has shifted its position in recent months, moving away from sentiments that cryptocurrencies should be universally treated as securities.
SEC Corporate Finance Director William Hinmen’s comments to the Yahoo Finance Summit recently that transactions involving ether, the cryptocurrency of the Ethereum network, shouldn’t be considered security transactions, were universally well received by the industry. Next up, the blockchain community waits for the SEC to potentially release its decision on the latest proposed Bitcoin ETF from CBOE Global Markets in August.
As blockchain and cryptocurrency start to move away from its initial scrappiness toward a more professionalized industry, top talent is beginning to realize that blockchain technology presents a unique opportunity to remain ahead of an ever-changing curve. In 2017, blockchain jobs tripled, and 2018 is showing no signs of slowing down — with the first half of the year seeing a flight of young traders from Wall Street, choosing career paths away from traditional firms.
Meanwhile, up-and-coming blockchain projects are attracting investment interest at breakneck pace compared to traditional businesses. It took payment processor Square three years to reach a $1 billion USD market valuation, whereas crypto exchange Coinbase recently announced a staggering $8 billion USD valuation less than 12 months after being valued at $1.6 billion USD. Many corporate executives recognize this monumental growth, and are frustrated with the speed at which Fortune 500 companies are approaching blockchain and cryptocurrency — instead wanting to lead the charge from the ground up.
Certainly, some of these blockchain projects have more funding allocation for talent than the old blue chip landscape, and this is particularly appealing to mid to lower level staff, as well as C-Suites. However, while success is certainly an important indicator for any career transition, it would be shortsighted to believe that industry leaders at the pinnacle of banking and finance are solely considering blockchain startups for the money.
At its core, blockchain presents a once-in-a-generation opportunity to leave a positive and indelible impact on the world. From increased accountability, to heightened data security, to unparalleled transparency, the real-world applications for blockchain are seemingly endless.
While this talent exodus is an important sign of industry growth and mainstream recognition, banking and finance is just one vertical that blockchain is poised to disrupt. As talent increasingly flocks from fields as diverse as supply chain, gaming, social media, and health, to name a few, we’ll begin to see the industry fulfil its promise of transforming businesses and reshaping everyday life.
With the greatest technological leap forward since the internet on the horizon, it’s likely more and more industry leaders will stake their traditional positions for an opportunity to explore blockchain’s expanding universe of opportunity and innovation.
About the author
Michael Chang leads the Wachsman Strategic Advisory Group in New York. He has over a decade of investment banking experience advising Fortune 100 corporations, private equity sponsors, family offices, and venture capital investors. Most recently, he was a Senior Vice President in the Technology Investment Banking Group at Jefferies. He founded and led the Jefferies blockchain client coverage effort, where he developed and executed strategies for clients including technology companies, institutional investors, and emerging blockchain companies. Prior to Jefferies, Michael was a Director in the Mergers and Acquisitions Group at Bank of America Merrill Lynch and Vice President at Citigroup, where he collectively advised on over US$40 billion in M&A and capital raising transactions.