‘Crypto Winter’ Threatens to Chill a Hot Zone for Finance Jobs
The surge in cryptocurrencies over the past year has had a very positive effect in the real world: a job boom.
The surge in cryptocurrencies last year has had a very positive effect in the real world: a job boom at startups and other companies trying to get in on the action. Now that many tokens have crashed by as much as 50% or more in a matter of months, companies in the industry are much more cautious in their plans, according to Hany Rashwan, co-founder and managing director of exchange provider 21Shares – traded products that invest in cryptocurrencies. Still, Rashwan says his company, which manages about $2.5 billion in assets, is firmly sticking to its hiring plans.
Rashwan joined the “What Goes Up” podcast to talk about the effects of the so-called “crypto winter” and how 21Shares was able to grow rapidly in just three years. Below are the condensed and slightly edited highlights of the conversation. Click here to listen to the entire show and subscribe to Apple Podcasts or wherever you listen.
Q: You had very ambitious hiring plans. And obviously, that’s the story you’ve heard everywhere, companies are really growing and a lot of venture capital is coming. What do you think is the mood in the industry after this ugly crypto selloff? Does it make you question your plans?
A: Of course, that changes the scene. People are more cautious. Suddenly, the companies that more casually sponsored $1 million for conferences, mostly crypto insiders, are probably rethinking some of them; companies that were not on solid ground. Well, now we see who is swimming without a bathing suit.
Now, lots of sun is the best disinfectant here. And so that makes everyone more cautious, which is probably why the data shows that downturns are better times to build businesses. All is not well. You have to make sacrifices. You have to think about this or that, which is a new paradigm shift for our industry. But you are honest with yourself. You are intellectually honest with yourself. You saw it coming, if you pay attention. You’ve seen this coming if you’re into crypto for sure because we normally do and will continue to do so for some time. You prepare for it.
So we still have all these hiring plans. We have 40 or 50 positions open. We are 125 people now, compared to around twenty about a year ago. But we’ve been a smart squirrel during the bull market and really stockpiled to make sure we’re not only safe now, but can be opportunistic. We were extremely profitable, we remain quite profitable. But the extra attention to detail is something I definitely miss during bull markets where everyone is a genius. And I wish the prices were higher – I still do, but I know they will be higher in a year.
Q: Tell us about 21Shares and your biggest products.
A: I grew up in America, as did my co-founder. And so the fact that we built the company in Switzerland was very much on purpose. What we were just looking to do in the beginning was to put crypto into a safe, accessible, known package or wrapper. For many people, buying ETFs is easier; for some people, buying ETFs is necessary. And we didn’t find any of these products there. There were many reasons why not, but we traveled the world. We spoke to 27 different jurisdictions, different regulators around the world, before settling on Switzerland, and then using Switzerland as a base from which to expand.
The first product we launched was actually a bit of a complicated product. We first listed what was the world’s first and only index fund. And so it was an index of the top five cryptos that were 75%, 80% of the market with one stock. And it was the first time anything in the world was listed on an exchange that was physically backed. These are physically backed commodity ETPs, and we put crypto in them.
Right now we have maybe about $2.5 billion spread over about 25 products in total. We will double or even triple the product line this year. We cover everything from unique assets like the most popular, Bitcoin, Ethereum, to some more esoteric and younger ones like Polkadot, or Chainlink or Solana, or Binance Coin. We also have a bunch of indices if you want to buy thematic baskets, and we also have the only short Bitcoin in ETP format.
Q: Do you see any interest from institutions to get into DeFi (decentralized finance)? What would it take to get them involved?
A: The institutions are not there. They’re on their way, but everyone’s on their way to something. I think they still need a lot, especially if it’s big pension funds and big insurance companies and so on. The good thing is that they’re looking at falling bond yields, interest rate issues, absolutely low, sometimes negative yields — like in Switzerland, it’s minus 75 basis points, that’s what the bank charges you against your balance — and they’re seeing all this and they have to do something about it.
So those are actually some of the best conversations we’ve had, but those are the conversations we’ve had that we know will take another two, three, four, maybe five years to come to fruition. And that’s fine – you keep investing in it. But I think it will be a while before that really tips the scales, which is what makes it such a unique asset class, because I’m pretty sure most asset classes are from first adopted by the institutions.
Q: Tell us about Amun (a token provider that Rashwan runs alongside 21Shares co-founder Ophelia Snyder) and what index tokens are.
A: It’s all about the end consumer, when you think about it. If our mission is to make crypto more accessible, and what we see ourselves doing is just building bridges in the world of crypto, if you want to push that analogy to the limit, then there are different vehicles for different people on this bridge. And that’s how we see tokens overall, just conceptually is that for some people the product that makes the most sense is an ETF. My mother, for example, fund manager, for example. But for some people, and it could either be a mix of maybe someone who’s more technically savvy and more advanced in crypto, maybe they’re in a geography where in a foreseeable future, A) we will not be listed locally on a local stock exchange, and B) they will not have access to the markets in which we are located.
Most people in the world do not have access to the US stock system. And that in itself is the biggest, not to mention the German stock market or the French stock market. And so we want to have a product, whether you’re in Guatemala or Germany, and we want to continue to have that. And there are indexes that I can give you in an ETP format, but if you want to do thematic allocation in, say, the metaverse, or DeFi, or whatever, and you want it for a reason whatever like a Solana token or an Ethereum token, we should have that product, it should also have our name on it.
That’s the basic summary of why we make tokens and how we think it’s about greater accessibility. You touch on some very interesting things, though, in terms of what kind of products you can put on tokens because it turns out when you start doing that then you’ll see there’s a lot of things I can doing with tokens impossible to do with ETFs and a few others the other way around, but most tokens are better in many technological ways.