Wall Street Firms Make Crypto Push to Catch Up With ‘Cool Kids’

On Wall Street, Jefferies Financial Group is expanding banking services for crypto clients, BlackRock Inc. is backing a stablecoin firm while Goldman Sachs Group Inc. is ramping up crypto trading. There’s even a former bank executive who switched his LinkedIn profile -- to an avatar.

The moves by financial heavyweights -- and one banker’s profile reinvention -- underscore how far Wall Street firms have come in accepting cryptocurrencies. For years, executives at banks and money managers were some of the industry’s most vociferous dissenters, until soaring prices and a flood of investor money drove home the point that staying on the sidelines meant missing out.

But as demand rises, that earlier resistance could impede Wall Street’s latest efforts to stay competitive, just as regulatory uncertainty and internal compliance cloud expansion plans. Goldman’s Chief Executive Officer David Solomon said this month the bank was taking its cue from regulators, calling their guidance “very restrictive and very, very small.”

“Banks are forever going to be trying to play catchup,” said Michael Moro, CEO of digital currency prime brokerage Genesis. “Crypto is going to move way faster than banks can. We have every bank in the world pretty much having some sort of crypto, blockchain working group.”

Institutional investors traded $1.14 trillion of cryptocurrencies last year on the largest U.S. crypto exchange Coinbase Global Inc., a ninefold increase from 2020. Main Street’s deepening uptake has intensified scrutiny: Treasury Secretary Janet Yellen cautioned this month about potential excesses or systemic risks stemming from a market where financial transactions use crypto and blockchain, while President Joe Biden in March issued the first executive order targeted at digital tokens to help address possible hazards.

On Wall Street, efforts made over the past year or so are coming to fruition. Jefferies, which already provides leverage finance, equity capital markets and convertible bond issuance services for crypto clients, plans to expand in the next couple of months as demand rises, said Alexander Yavorsky, the firm’s global joint head of financial institutions.