Why Traditional Finance Experts Are Moving From The Sector To The Cryptocurrency Niche
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Why Traditional Finance Experts Are Moving From The Sector To The Cryptocurrency Niche

Created 2yr ago, last updated 2yr ago

TradFi experts are joining crypto for various reasons — from helping to improve the global monetary system, to experiencing digitization and the promise of innovation at a rapid pace.

Why Traditional Finance Experts Are Moving From The Sector To The Cryptocurrency Niche

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For many people, it seems as if traditional finance and cryptocurrency are at odds with one another — one industry can disrupt the other. However, it may never come to that. Instead, there is growing momentum supporting the overlap between traditional centralized finance (CeFi) and decentralized finance (DeFi) — the world of cryptocurrencies.
That momentum becomes more apparent when looking at the former Wall Street executives and other finance experts taking positions at cryptocurrency and blockchain firms. For crypto to become mainstream, it will need the legal, financial and regulatory support and expertise these finance veterans can bring to the table. Forging a collaborative ecosystem between crypto and CeFi is the avenue to pursue, rather than competing directly

As several finance experts now actively take up jobs in the crypto space, it is crucial to determine the reasoning behind such a move. Giving up a highly-paid job to work in an industry that still faces much opposition from financial institutions and government regulators seems like a questionable decision. However, it may make more sense than you think.

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Cryptocurrency Needs Help From TradFi Experts

Young Crypto Ecosystem

The first crucial factor to consider is the immaturity of the cryptocurrency ecosystem. 

The oldest crypto — Bitcoin — has been around for 13 years. To put that into perspective, the oldest surviving bank in the world — Banca Monte Dei Paschi di Siena — was founded in 1472. Current financial institutions have existed and evolved over a long time, while cryptocurrency is a relatively new industry.

More specifically, the code is great and new projects come to light every quarter. Trends like NFTs, DeFi, IDOs and others are all valid and can have long-term implications. However, there is still a severe lack of insurance, protection, or the ability to become a new financial paradigm. With the help of finance experts seeking crypto jobs, that situation will improve gradually.

One of the people acknowledging the need for better solutions is cryptocurrency derivatives trading platform  Phemex CEO Jack Tao:

"With over a decade of experience at Morgan Stanley, I've seen what centralized financial institutions are capable of doing to protect themselves and was disappointed to see the same tactics in an ecosystem that was supposed to embody principles of distributed control and equality. We started Phemex because investors deserve better. The cryptocurrency industry is small, but burgeoning, and we want to drive the change towards a better monetary system."

More importantly, financial experts possess the necessary knowledge to address some long-standing pain points in the crypto industry. The average enthusiast may not even be aware of these shortcomings, yet it is still crucial to resolve such matters early on.

Address Shortcomings of Traditional Finance

More importantly, it is always beneficial to look at the bigger picture. Most people don't understand code as they don't know how to read it or what certain functions may do. However, they can acknowledge issues that linger, such as shortcomings for basic consumer lending practices. Technology is only part of the equation in the financial sector, as there are many other aspects to consider as well. 

unFederalReserve founder Howard Krieger sums it up as follows: 

"It was apparent that the technology solved a lot of unresolved payment and security related issues in traditional finance. The challenge was the lack of sophistication among the technologists as it relates to U.S. regulatory compliance and basic consumer lending practices. The draw to lean in there and help craft a new way to do business, to save money for the consumers and to enhance equity among underserved and overserved community was too much to pass up."

The Ongoing Digitization of Finance

Several reasons can be identified as to why finance experts would pursue opportunities in the cryptocurrency industry. First, finance is digitizing at a rapid pace, yet centralized institutions, such as banks, are often slow on the uptake. 

Moreover, there is no real innovation in the CeFi space on that front, although new services, such as robo-advisors, continue to gain widespread traction. For those who genuinely seek innovation, the cryptocurrency space holds a lot more promise.

Decentralization removes the need for intermediaries and ensures no one acts as the "supreme leader" of blockchain networks. It allows for free and creative thinking, tinkering and exploration — something one will rarely find in the CeFi world. Cryptocurrency is a thriving and booming industry, and those who want to explore digitization opportunities — or create new ideas — will drop their current jobs in favor of a more experimental future.

Gaurav Sharma, the founder of BanksByDay.com, adds:

"Cryptocurrency is also a more dynamic and interesting space. I know those terms are cliches, but this is where innovation is happening. This is where you get to try out new things that no one in the world has ever done before, this is where you feel like you are leading the pack. For people who are happy working a salaried job, traditional finance is still awesome. But for entrepreneurs, it makes far more sense to be in a budding sector rather than a mature one."

Client Interest Is Shifting

Although CeFi participants may not always want to admit it, they aren't always able to suit their clients' needs. As investors begin to explore alternative options for portfolio diversification that go beyond what banks and other providers can offer, they will grow increasingly frustrated. 

There is a market for service providers combining the convenience of bank-level investments with exposure to cryptocurrencies such as Bitcoin and Ethereum. It also paves the way for CeDeFi solutions in the future.

Gryphon Digital Mining CEO & Director Rob Chang comments:

"In 2018 I left an MD role at a global investment bank after 24 years in finance because I remember what happened when the internet started. People who moved quickly and joined startups in the space had the opportunity to do great, pioneering things while doing incredibly well financially. I promised my younger self then that the next time I saw a new development that would fundamentally change the world that I would drop everything and join it. After running into some clients who were starting to invest in bitcoin, I was prompted to do some research and quickly realized that crypto was going to change how global finance would work. I soon dropped everything and joined a bitcoin miner as its CFO."

While the story of Rob Chang shows how risky it can be to jump into the unknown, it is also a liberating feeling. No one should settle for a convenient job that hinders their intrigue and wonder. Some people are meant to be pioneers in a new space and take risks along the way. Others will prefer the safety of the job and the environment they know. Both options are equally viable, but the time to make one's career path decision is now.

Speaking of pioneering solutions in the cryptocurrency space, CryptoTrader. Tax's Head of Tax Strategy Jordan Bass states:

"The reason why I decided to start Taxing Cryptocurrency is that I recognized that there is an incredible level of demand for this type of service from crypto companies, but very little help available. Unfortunately, there just aren't very many tax or legal experts in the cryptocurrency space. I made the leap because I realized that there was an opportunity for my firm to serve an entirely new industry."

The Role of Crypto in Finance

No one can deny the growing role cryptocurrency plays in the financial spectrum. Although assets like Bitcoin are seen as speculative investments or a store of value, depending on who you ask, networks like Ethereum, Solana and Binance Smart Chain play a growing role in unlocking decentralized finance

It is a very different take on financial products and services, although one that attracts many finance experts. RevenueGeeks Co-Founder Adam Wood adds:

"I believe it is difficult not to be fascinated by the ingenuity of crypto finance if those in the traditional finance industry eliminate biases and study crypto finance with a humble attitude. As a result, traditional financial talent and capital are streaming into the crypto sector at a rapid pace. They have boosted the cryptocurrency community's momentum and aided in the development of a bridge between virtual and real economies."

It will be intriguing to see where the cross-over between CeFi and crypto leads to. Developers and experts can unlock numerous new products and services through a broader collaboration. Moreover, the mainstream is taking notice of cryptocurrency, either as an investment vehicle or for other financial purposes.

Grasping the risk-reward aspect remains a struggle for most though, as EonLabs Co-founder Victor Hogrefe explains:

"It is inevitable that as normal, retail investors look into this, some of them may not really understand the risk-reward calculation for cryptocurrency. I got out of advising colleagues about how to get into cryptocurrency trading when senior citizens started coming at me with their life’s savings. I think this frothiness in the marketplace may get better before it gets worse. Some less scrupulous advisory firms or consultants may take advantage of prospects who are really not the best fit for this kind of speculative venture."

Cost-Savings Attract The Masses

One final aspect to consider is how cryptocurrencies are often more efficient from a cost perspective. More specifically, even finance experts acknowledge the traditional way of sending money abroad is either too slow, too expensive, or a combination of both. 

Crypto assets can make a meaningful impact on that front, although Adam Fard' UX Agency's Founder & Head of Design Adam Fard adds:

"International money transfers typically entail more intermediation than domestic transfers, necessitating transfers via banks and other money transmitters in various countries, as well as possible currency conversions. Cryptocurrency proponents argue that they can avoid these costs since they are conducted over the internet, which is already worldwide, and are not backed by government-issued fiat currencies. Nonetheless, quantifying the cost of traditional payment systems and the proportion of those expenses passed on to consumers is difficult. Conducting a quantitative analysis of this nature is outside the scope of this paper. "


Finance experts have taken great interest in the cryptocurrency space for a variety of reasons. They all bring value to the broader ecosystem, whether they want to pioneer new ideas, aid existing service providers through expertise, are enchanted by its benefits, or want to see more research conducted regarding certain matters. 

Cryptocurrency and finance experts can go hand-in-hand for multiple reasons. Doing so will allow the ecosystem to thrive and create an overlap with traditional finance to fill missing gaps, address inefficiencies, and provide a fresh wave of innovation. Moreover, it paves the way toward achieving global financial inclusion once and for all.

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