Home Finance & Fintech LMAX bets tradfi will drive crypto boom, Coinbase dreams of diversifying, ex-UBS exec flips to fintech

LMAX bets tradfi will drive crypto boom, Coinbase dreams of diversifying, ex-UBS exec flips to fintech

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As we step into autumn, the crypto winter still seems to be hanging around.

The FTX scandal that rocked the sector is casting long shadows on those trying to restore confidence in digital assets.

Take LMAX boss David Mercer. He is convinced another bull market is on its way, despite retail interest falling off a cliff since 2021.

Mercer isn’t betting on the likes of you and me taking an interest. He is seeing a gradual and steady stake being built up by traditional finance firms.

“The next crypto boom will be driven by tradfi adoption. You will see a bull run in the next 12 months driven by crypto ETF approvals,” Mercer told Financial News.

LMAX Digital launched in 2018. As of this June, it has completed $1tn in crypto trades, and has more than 750 institutional clients including asset managers and hedge funds.

“The last group that we will be waiting for is banks, which are 12-24 months away,” he says.

Coinbase’s dreams of diversification

In another example of a crypto firm trying to rebound, Coinbase is seeking to diversify so it can still make a profit if crypto trading tanks again.

Allowing more currency pairs on the platform – in Coinbase’s case, rising from 100 in 2021 to more than 600 now – has not boosted the bottom line, a report from Coin Metrics said.

“This shows that simply adding new assets isn’t a guaranteed way of generating trading fee revenue,” the Coin Metrics report said.

Coinbase has allowed tokens to be exchanged for yield, but the report said the company’s fate is still very much tied to trading activity.

Execs at the firm have noted the move to diversify revenue away from trading, seeing the firm as the primary portal for individual interaction with all parts of the crypto ecosystem.

While the share price has moved to more than $70, up around 101% this year, this is still below its 2021 peak of more than $340. Bitcoin continues to hover at $26,500, far from its $64,00 high around the same time.

Perhaps approval of a spot bitcoin ETF could shift things.

But even this may be a double-edged sword, a Barron’sreport noted: “By giving investors an easier and potentially cheaper way to buy and own bitcoin, such an ETF could bolster the token’s price even as it cannibalises some of Coinbase’s user base.”

More than Metaverse talk

The UK is pinning its colours to the blockchain mast. Natalie Elphicke, MP for Dover, appeared in the metaverse on 20 September to address 51 countries to set out the nation’s stall on the new tech.

Elphicke, who chairs Parliament’s new all-party parliamentary group for blockchain technologies, said that the UK has the potential to become a blockchain-enabled “smart country”. However, she also noted that it is currently behind competitors in securing blockchain-related jobs.

The country ranked 12th in the first quarter of 2023, garnering only 2,000 out of 90,000 blockchain roles globally. A little more action, a little less virtual talk, perhaps.

Ex-UBS chair Axel Weber’s flip to fintech

Bankers can always find a pivot. From ex-Credit Suisse boss Tidjane Thiam founding Spac Freedom Acquisition Corp, to ex-Barclays man Bob Diamond’s investment firm Atlas Merchant Capital Fund, they tend to land on their feet.

Former UBS chair and Bundesbank president Axel Weber has now found a home on the advisory board of fintech provider Raisin.

At a crucial time last year, ahead of UBS’s historic takeover of local rival Credit Suisse, Weber stepped aside at the bank, and was replaced by former Morgan Stanley executive Colm Kelleher.

Raisin, which has amassed some €50bn in deposits and 1.3 million customers since launching in 2013, operates across Germany, the UK, the US and five other European countries. Its seed investors include the likes of ex-Georgian prime minister Lado Gurgenidze.

Weber has also taken on an advisory role with Boston Consulting Group since leaving UBS, proving yet again, there is always another life after banking.

Recommended reading

Why tech bros and politicians can’t really connect (Wired)

SEC collects Wall Street’s private messages as WhatsApp probe escalates (Reuters)

NatWest ‘spied on health of customers’ (Times)

To contact the author of this story with feedback or news, email Penny Sukhraj

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