‘Crypto Winter' threatens to cool red-hot area for finance jobs
The surge in cryptocurrencies last year brought along with it one very positive real-world effect: A boom in jobs.
The surge in cryptocurrencies last year brought along with it one very positive real-world effect: A boom in jobs at startups and other companies trying to get in on the action. Now that many tokens have crashed as much as 50% or more in a few months, companies in the industry are being much more careful with their plans, according to Hany Rashwan, co-founder and chief executive officer of 21Shares, a provider of exchange-traded products that invest in cryptocurrencies. Still, Rashwan says that his company, which oversees about $2.5 billion in assets, is holding firm to its hiring plans.
Rashwan joined the “What Goes Up” podcast to talk about the effects of what's being called “crypto winter” and how 21Shares was able to grow quickly in just three years. Below are condensed and lightly edited highlights of the conversation. Click here to listen to the full show and subscribe on Apple Podcasts or wherever you listen.
Q: You had some really ambitious hiring plans. And obviously that's the story you heard all over the place, companies really ramping up and a lot of venture capital coming in. What do you sense is the mood of the industry after this nasty selloff in crypto? Does it make you second-guess any plans?
A: Of course it changes the scene. People are more careful. All of a sudden, companies that were more casually doing $1 million sponsorships for conferences of mostly crypto insiders are probably rethinking some of these; companies that were not on solid footing. Well, now we see who's swimming without any swim trunks.
Now a lot of sunlight is the best disinfectant here. And so it makes everybody more careful, which is probably why the data shows that downturns are better times to build companies. Not everything is going 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're intellectually honest with yourself. You've seen this coming, if you're careful. You've seen this coming if you're in crypto, that's for sure, because we do these normally and we'll continue to do them for quite some time. You prepare for it.
So we still have all of these hiring plans. We have 40 or 50 open positions. We're 125 people now, up from 20 or so about a year ago. But we've been an intelligent squirrel during the bull market and really stored up to make sure that we not only are safe now, but can be opportunistic. We were wildly profitable, we remain pretty profitable. But the extra attention to detail is something that I certainly miss during the bull markets where everyone's a genius. And I wish the prices were higher -- I always do, but I know they'll be higher a year from now.
Q: Talk to us about 21Shares and your biggest products.
A: I did grow up in America and so did my co-founder. And so the fact that we actually built the company in Switzerland was very much on purpose. What we were just looking to do at the beginning was put crypto in a safe, accessible, known package or wrapper. For a lot of people, buying ETFs is easier; for some people, buying ETFs is necessary. And we couldn't find any of these products out there. There were numerous reasons why not, but we scoured the globe. 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 represented 75%, 80% of the market with just a single share. And it was the first time that anything globally had been listed on a stock exchange that was physically backed. These are physically backed commodity ETPs, and we put crypto in them.
At the moment, we have maybe $2.5 billion or so spread across about 25 total products. We're going to double -- maybe triple -- the product suite this year. We cover everything from single assets like the most-popular ones, Bitcoin, Ethereum, to some more esoteric, younger ones like Polkadot, or Chainlink or Solana, or Binance Coin. We also have a bunch of indexes if you want to buy thematic baskets, and we also have the only Bitcoin short in an ETP format.
Q: Do you see an interest from institutions to get into DeFi (decentralized finance)? What would it take to get them involved?
A: Institutions are not here. They are on the way, but everyone is on the way to something. I think they still need a lot, especially if you're talking about big pension funds and insurance companies and the like. The good thing is that they're looking at falling bond yields, issues with interest rates, absolutely low yields, sometimes negative -- like in Switzerland, it's negative 75 basis points, is what the bank charges you on your balance -- and they're seeing all of that and they need to do something about it.
So they are actually some of the best conversations we have, but they're the conversations we have that we know will take another two, three, four, maybe five years to materialize into anything. And that's fine -- you continue to invest in that. But I think it will be a while before this really tips the scale, which makes this such a unique asset class, because I'm pretty sure that most asset classes are first embraced by the institutions.
Q: Tell us about Amun (a tokens 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 into the crypto world, if you want to take that analogy to the limit, then there are different vehicles for different people on that 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, a fund manager, for example. But for some people, and this could be either a mix of maybe someone who is more technically savvy and crypto forward, maybe they're in a geography where for the foreseeable future, A) we will not be listed locally on a local stock exchange, and B) they will not have access to the markets that we are on.
Most people around the world don't have access to the American stock-exchange system. And that by itself is the biggest one, let alone the German stock exchange or the French stock exchange. And so we want to have a product, whether you are in Guatemala or in Germany, and we want to continue having that. And there are indexes that I can give to you in an ETP format, but if you want to make a themed allocation into, say, the metaverse, or DeFi, or anything else, and you want this for some reason as a Solana token or an Ethereum token, we should have that product, it should have our name on it as well.
That's the basic summary of why we do tokens and how we think about it is greater accessibility. You do get into some very interesting things, though, with respect to what kind of products you can build in tokens, because it turns out that when you start doing this, you'll then see, there's a lot of things I can do with tokens that are impossible to do with ETFs and a couple of the other way around, but mostly tokens are better in a lot of technological ways.