Institutional Crypto Units Shut Down: Market Woes, Regs & the Search for New Homes

Intricate bank interior with signs of disarray, crumbling crypto coins, dimly lit atmosphere, cold color palette, tense boardroom meeting, reflections of concerned faces, an open email signifying continuity, subdued baroque style, hints of shifting focus, ghostly regulators lurking, somber mood.

Just over a year after launching its crypto unit, American independent investment bank TD Cowen has announced the shutdown of Cowen Digital, though it has not provided a clear reason why. The multinational bank launched Cowen Digital in March 2022 to provide institutional clients exposure to the crypto market via 16 crypto assets, including Bitcoin and Ether.

At the time, the firm also teased that it would launch additional services revolving around futures, derivatives, and decentralized finance. While it had also made executive hires for its European operations as recently as December, in a new email currently circulating online, Cowen Digital and its team of roughly 10 employees will close down as of June 1.

Cowen Bank itself had undergone a shake-up over the last 12 months, after it was acquired by TD Bank Group for $1.3 billion in August 2022, with the deal being completed in March this year.

The closure comes amid a number of crypto company collapses last year, alongside the U.S. banking and regulatory woes in 2023. Notably, the email suggested that the Cowen Digital team is looking to carry on its work under a different organization. “Our entire team believes strongly in the need for trusted counterparties who understand the needs of institutional investors – through white-glove high and low touch execution, deep knowledge-driven content, corporate access and group educational events. We will continue to try and fulfill that endeavor, but will have to do so in a different home,” the email reads.

The closure of Cowen Digital marks the second institutional crypto client unit to shut down in the space of a week. As reported by Bloomberg on May 25, Venture capital conglomerate Digital Currency Group (DCG) has opted to close its prime brokerage subsidiary TradeBlock, with the process starting as of May 31. The firm cited a “prolonged crypto winter” along with a tough regulatory climate in the U.S. Cointelegraph also reported in February that DCG suffered losses of $1 billion in 2022 due to the contagion stemming from the bankruptcy of crypto hedge fund Three Arrows Capital.

This news sparks a light sense of skepticism and highlights the conflict between crypto enthusiasts and the challenging regulatory climate affecting the industry

Source: Cointelegraph

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