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The Growing Talent Exchange Between Bitcoin and Wall Street


In February Bitcoin Magazine reported that Crypto Facilities Ltd., a London-based broker founded by former Goldman Sachs Executive Director Timo Schlaefer, had announced the launch of its bitcoin derivatives trading platform.

The Crypto Facilities platform is trading bitcoin forwards, which are directly linked to the price of bitcoin, but also developing other digital currency derivative products.

“This is uncharted territory,” said Schlaefer as reported by Reuters. “It’s an exciting opportunity to participate in a new area of technology that has massive potential.”

Wall Street and Bitcoin used to be completely separated and incompatible worlds, but now there is more and more interpenetration and talent exchange between the two worlds. Recently Santander InnoVentures and other financial firms launched a call to action to banks, financial institutions and financial technology businesses to work together to reboot the banking and financial services industry.

While seasoned financial professionals like Schlaefer are founding or joining Bitcoin startups, banks and Wall Street companies are fishing for top talent in Bitcoin waters, Reutersreports. In June, online bitcoin job ads surged to a record high of 306.

Reuters notes that Schlaefer probably would make more money at Goldman, but what attracts him and other migrants from Wall Street is the ability to be part of the growth in Bitcoin and its underlying blockchain technology.

“A lot of people are entering the Bitcoin space as the sector has reached an overall level of funding that’s hard to ignore,” said Coinsetter founder and CEO Jaron Lukasiewicz, who moved to the Bitcoin world in late 2012 from private equity firm The CapStreet Group.

Total investments in Bitcoin companies for 2015 – totaling $375.4 million in the first six months – have already exceeded 2014’s total of $339.4 million. According to Tomasz Tunguz, a partner at venture capital firm Redpoint, Bitcoin is the fastest growing area of startup investment in 2015, but it is still relatively underfunded, which makes it an ideal investment target for venture capitalists and institutional players alike.

In fact, as recently reported by Bitcoin Magazine, major financial players such as Citi, UBS and Barclays are exploring the blockchain, while a BNP Paribas analyst is persuaded that the blockchain could revolutionize finance. According to the Santander Innoventures report “The Fintech 2.0 Paper: Rebooting financial services,” blockchain-based technology could save banks $20 billion per year by 2022.

Other top financial professionals who made the jump to Bitcoin mentioned in the Reuters article are Paul Chou, founder and chief executive officer of Ledger X (formerly at Goldman Sachs), and Henri Chan, chief operating officer at digital wallet platform Airbitz (formerly at Deutsche Bank, UBS and Morgan Stanley).

Former JPMorgan Chase & Co. executive Blythe Masters, the creator of the modern credit default swap, (a derivative used to trade credit risks), who now heads blockchain company Digital Asset Holdings, is not mentioned in the Reuters article but is probably the best known financial heavyweight now active in the blockchain space. At the recent Exponential Finance 2015 conference in New York, Masters said that the market for financial blockchain applications ultimately will be measured in the trillions.

“How seriously should you take [the blockchain]?” Masters asked. “About as seriously as you should have taken the concept of the Internet in the early 1990s. It’s a big deal.”