Finance

Ex-Goldman trader who jumped to crypto says Wall Street is catching on

Making the jump from Wall Street to bitcoin is easier said than done in 2021, but Kraken’s Juthica Chou took an even larger leap of faith when starting her own crypto business eight years ago.

Chou, who was previously a derivatives trader at Goldman Sachs, co-founded America’s first approved crypto derivatives platform, LedgerX, in 2013 — back when bitcoin was worth just $1,242.

Fast forward to this year, with bitcoin reaching $64,000, it’s been a seismic period for the cryptocurrency sector. Banks such as Goldman, Morgan Stanley and Citigroup are now offering crypto trading access to clients, using derivatives products as a way into the market where regulation prevents them from managing physical digital assets.

“Wall Street will get involved where the money is and where the opportunity is, and I don’t think that’s a bad thing,” said Chou, who is now head of over-the-counter derivatives at Kraken. She spoke with Financial News for the Barron’s Live podcast. “It really speaks to the fact that their clients are interested, and that’s how you know that there’s real client demand, when the banks actually start taking action to offer these products.”

“It’s really good that now there are derivatives products that they can offer their customers to give them exposure to this asset class — that was not the case a few years ago.”

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Chou added that advances made in the regulation of cryptocurrency-linked firms “speaks to the infrastructure that has been developed”, which has made it easier for banks to consider getting involved in the space.

“Now firms with a very large base, very sensitive clients and large regulatory restrictions can actually engage with the crypto ecosystem, and they’re comfortable enough with the integrity of the platforms, exchanges and products to offer them to clients,” she said.

But Chou’s journey into cryptocurrencies has yet to run smoothly. The US Commodity Futures Trading Commission handed a $1.25m fine to Kraken this month as part of a settlement, in which the regulator accused the exchange of illegally offering margin spot crypto products to US investors.

Chou spoke to FN before the CFTC fine. A spokesperson for Kraken said the firm had been in talks with the CFTC about its guidance for margin trading and started limiting US access to its products in June.

The fine was also not the first time Chou weathered regulatory missteps. She was placed on administrative leave from LedgerX in 2019, alongside her husband who acted as its chief executive, after the business announced crypto futures products without proper licensing from the CFTC.

READ Regulators’ crypto dilemma laid bare as El Salvador banks on bitcoin

Looking ahead, Chou said her reasons for joining the cryptocurrency sector are fast becoming a reality, as the public and private sectors explore ways to capitalise on the industry’s social benefits.

“It really was the romantic notion of democratising access to financial services,” Chou said.

“That’s something I had worked on when I was shortly out of college, back with family overseas in India. I was seeing the discrepancy in when you don’t have access to financial services, and bitcoin could be this thing that, at the time, anybody could use.”

She praised efforts being made in regions such as El Salvador to turn bitcoin into a currency for the unbanked, despite its technological hitches.

“Over time as I’ve been more involved in the space, I’ve come to appreciate that notion a lot more,” Chou added. “Now there’s nuances and aspects of cryptocurrency that maybe I didn’t appreciate when I first got into it — but for me that was the initial spark.”

To contact the author of this story with feedback or news, email Emily Nicolle

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