A month ago, we discussed the growing intersection of traditional finance and crypto markets. One notable example we covered was Goldman Sachs and their specific angle to crypto, focusing on derivatives tied to digital assets. Goldman has been collaborating with crypto merchant bank Galaxy Digital to focus on derivatives tied to digital assets. Many saw the move as a positive sign for interest in crypto and the overall maturity of the asset. Even then, banks do not provide much unique ground in terms of financial products that the decentralized space is already working on. From tokenized DAOs to NFT projects and even derivative focused platforms like dYdX, the web3 space may not need banks in any capacity. Most in the space are not fans of the traditional system, finding it outdated, monolithic, and unfair for many. So, although banks may begin to offer direct customizable exposures to the crypto market, it may not be a product increasing the size of their user base.
Beyond financial products, labor is another ground for competition between traditional banks and startups in the crypto space. Over the past year Wall Street has been increasing the number of hires and overall size of their digital asset teams, even so, many employees are leaving to pursue riskier and higher reward options at startups in the same space. A notable example comes from Mary Catherine Lader, the chief operating officer at Uniswap Labs. Lader left her prestigious position on Wall Street as a managing director at BlackRock to join the crypto project. Despite this shift, a key point comes from Umar Farooq, the CEO of Onyx by JPMorgan who explained that although Banks move slower and take time to get projects on the road, once they do, there is tremendous power backing the initiative. And that’s when products are launched, they reach “a scale that a fintech can only dream of.” What do you think of this competition between Wall Street and startups? And who do you think will be more successful in shaping the future of crypto markets?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.