Wall Street firm Jane Street, known for its dominance in established financial markets such as exchange-traded funds and corporate bonds, is becoming a major player in a fast-growing field: cryptocurrency trading.
The New York-based company, which executed its first crypto trade in 2017, provides liquidity for a range of digital assets, from bitcoin and ethereum to some of the meme coins popular on social media. It is one of the market makers that Robinhood Markets Inc. Powers clients’ free crypto trades. It is also exploring working with emerging platforms, such as decentralized finance exchanges, a crypto wild west where computer code known as smart contracts provides quotes and automatically executes trades on the blockchain. Is.
Crypto trading “has been a clear growth area” over the past 16 months, said Turner Batty, a Jane Street trader who helped start the desk. The number of people working on cryptocurrency on Jane Street “has never been higher,” he said. Now, dozens of employees globally have jobs focused on crypto trading or have some part of their job, such as tax and accounting, that deals with digital coins.
The expansion comes as a growing class of Wall Street trading houses introduce themselves to cryptocurrencies, where their quantitative approach finds new use in a nascent, fragmented market filled with volatility and inefficiencies. Market makers take advantage of price differences to buy and sell assets for their counterparties.
Some of Jane Street’s rivals, including Jump Trading, Susquehanna International Group and Hudson River Trading, have also been active in crypto over the years. They are facing digital asset-only firms like Alameda Research, founded by Jane Street alum Sam Bankman-Fried, a 29-year-old billionaire who also created major cryptocurrency exchange FTX.
Even Citadel Securities, whose billionaire founder Ken Griffin has been a crypto skeptic, was recently cast as a potential entrant after receiving a $1.15 billion investment from Silicon Valley investors with digital asset expertise. is seen.
Jane Street declined to comment on its crypto-trading volume and revenue. As a market maker, the firm takes risk on its bookkeeping, but does not take a long-term view on crypto valuations.
The recent slump in crypto prices has not affected institutional interests.
“In terms of demand, we are seeing inquiries from the breadth of institutions. Asset managers, endowments and private money institutions should not be caught off guard” if the US regulatory climate changes, said Mina Nguyen, head of institutional strategy at Jane Street. and they can increase their risk. “Sovereign Wealth Funds Asking Questions” about direct digital asset exposure.
While trading volumes have declined during the downturn, Jane Street has supported newly investing counterparties.
“There really aren’t instances where we’ve started a conversation with people and then they don’t seem interested anymore,” Batty said.
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