Love it or hate it the crypto industry’s allure for traditional finance (tradfi) talent is hard to ignore. While moments of extremely low market sentiment, multiple scandals and the ongoing ‘crypto winter’, may have slowed down the trend, plenty of top industry bods are still making the switch.
This is also true of the nascent crypto exchange-traded product (ETP) space which continues to attract high-calibre traditional finance candidates as it seeks to carve out its place in the professional investor landscape.
In recent months, ETC Group has appointed two investment strategy directors from justETF and First Trust Global Advisors while 21Shares made several senior hires including from JP Morgan and Tradeweb in a bid to increase their footprint across multiple regions in Europe.
Michael O’Riordan, founding partner of Blackwater Search & Advisory, said crypto ETP issuers are constantly on the hunt for former ETF salespeople as they look to go after institutional investors.
“The majority of crypto ETP providers will have sales teams full of ex-ETF salespeople,” he said. “The reason is because they are going after the same target client group.
“Most of the activity we see is on the sales channel where many issuers are looking to hire a distribution presence. That is why all are dipping into the ETF markets – ultimately, they are all fighting for the same pool of talent.”
It is not just ETP issuers that are after the expertise, regulators too are looking for talent. In October 2022, the Financial Conduct Authority (FCA) announced it was recruiting for 15 roles to build out its crypto expertise as it looks to take a tougher stance on the digital asset space.
Making the leap from traditional finance to crypto is not for everyone so how does the crypto ETP industry attract top talent?
Like many things in the modern world, cryptocurrencies have become a polarising asset class – from being labelled a ‘ponzi scheme’ to the future of finance – digital assets have a marmite-like quality.
O’Riordan said this plays out from a candidate perspective, with people either very excited about a role in crypto ETPs or those that show zero interest. “Sometimes if you pitch a job to somebody you can get shut down straight away,” he said. “There is no halfway house, people are either super interested or have zero interest.”
He puts these candidates in two buckets. Those who are “very conservative” and “risk averse” in their career thinking and those who have a more “visionary” approach to finance.
“Some find the prospect of crypto very exciting and intellectually stimulating, even if they do not have any experience in the industry,” O’Riordan added.
One such candidate who made the switch is 21Shares head of EMEA distribution Isabell Moessler. Having worked in traditional finance for more than two decades including stints at Euronext, ETF Securities and BlackRock, Moessler was attracted by the vision of the company.
“Having been in ETPs for many years, had another ETF provider asked me to join, it would have probably been less attractive,” she said. “But being a new asset class, somewhere where I had to learn a lot with so much innovation was something I wanted to be a part of.”
Bradley Duke, founder and co-CEO of ETC Group, who also has a traditional finance background, said the switch from traditional finance to crypto is unsurprising due to its unique and innovative structure.
“I have always been interested in new technologies but also you have people out there who are just interested in the new stuff,” he said. “This is really a once in a generation phenomenon and people really want to be a part of that story.”
A big part of the attraction to any cross-industry move is the remuneration, and despite mostly being smaller ETP firms, O’Riordan said they can compete with the ETF industry peers.
“Remuneration is probably on a par with the ETF industry,” he said. “A lot of these firms cannot leverage the brand recognition of a BlackRock but the base salary will often be on a par, if not better, than an ETF issuer. Bonus settlement will probably be less because they just do not have the cash flow yet but many firms will provide an equity stake in the business as well.”
Crypto winter hiring freeze?
Recent months have seen the crypto industry battered by one scandal after another and O’Riordan believes this has weighed heavily on those looking to make the switch.
“Before [the crypto winter] started firms were approaching us about launching a crypto ETP business, now we are just not getting those kinds of calls,” he said. “They have had to scale back dramatically on those plans and some have even had to make layoffs.”
The low crypto sentiment has also impacted the pool of talent looking to move. Duke said while there is much less “excitement and enthusiasm”, those who still share the vision are still interested.
“Some people are still sitting in their traditional finance roles and saying, ‘I am glad I stayed because it is looking very ropey,” he said. “But if you share the vision, it does not matter when you move. This is not some short-term flash-in-the-pan phenomenon.”
Moessler agrees the trend of traditional finance talent moving into the crypto space has suffered due to the terra and FTX incidents of last year while big banks and brokerages have intensified their search for talent.
“All of the big banks and brokerage houses now are very active and need people with in-depth knowledge, so you could see the reverse trend too,” she said. “For now, the ground is very much in crypto and I expect the trend to continue with people looking for good opportunities and new and interesting projects to work on. When I joined the ETF industry 20 years ago, people thought it would never take off. Fast forward to today and it is a $10trn industry so I am very bullish, this is just the beginning.”