TD Cowen, one of the largest banks in North America has decided to close down its cryptocurrency unit, “Cowen Digital”, just over a year after its launch, without providing any proper explanation.
Crypto Stuck Amid Regulatory Concerns
Following an explosive start since 2023, the cryptocurrency market is now witnessing a neutral and dull momentum on the back of gloomy global macroeconomic headwinds and worrisome inflation data. After clawing back to breach the $30K mark, Bitcoin (BTC) has again spiraled downward to trade just above $26K. Barring some digital tokens, Ethereum (ETH) along with major altcoins continued to extend their losses.
It seems concerns over US debt ceilings, coupled with hawkish commentary kept investors and traders on tenterhooks. The recent downward trend is also due to concerns about an impending interest rate hike, regulatory clampdown, and increasing inflation. Amid the downtrend, Edul Patel Co-founder and CEO at Mudrex reiterated,
“The hawkish remarks made by the president of Cleveland’s Federal Reserve Bank regarding potential rate increases in the United States unsettled the market. Also, discouraging manufacturing data from China further increased the unease among cryptocurrency investors over the past 24 hours.”
Owing to such a predicament, several digital asset firms have already deployed cost-cutting measures. Recently, Digital Currency Group (DCG), shuttered its TradeBlock subsidiary amid an uncertain regulatory environment for cryptocurrency in the United States. On May 25, Unbanked, a crypto fintech firm announced that it would be shutting down its cryptocurrency services due to regulatory pressure from the US government.
Barry Silbert’s crypto conglomerate, Digital Currency Group, is shuttering its TradeBlock institutional trading platform https://t.co/duE4YnknrR
— Bloomberg Crypto (@crypto) May 25, 2023
Crypto Contagion Continues
In the latest development, TD Cowen has also announced the shutdown of Cowen Digital which was launched to offer institutional clients access to cryptocurrency trading. According to reports, a new email has been circulating online that claimed the boutique investment bank has decided to shut down its crypto unit.
The boutique investment bank Cowen Inc. is shuttering a digital-asset unit that was launched to offer institutional clients access to cryptocurrency trading. https://t.co/FiU8KktN0a
— BNN Bloomberg (@BNNBloomberg) June 1, 2023
Though the leaked email did not provide any solid reason behind the shuttering of the crypto division, it hinted that the Cowen Digital team might join another organization to continue its work. The email stated,
“Today will be the last day for the team here at Cowen Digital.”
Cowen Digital was launched in March 2022 to facilitate cryptocurrency market exposure to institutions., offering 16 crypto assets at launch, including Bitcoin (BTC) and Ethereum (ETH). The investment bank also strengthened its cryptocurrency division by filling new positions as recently as last December. It even planned to expand its offerings with the addition of services around crypto futures, derivatives, and decentralized finance (DeFi).
Digital Asset Companies In Hot Water
It seems the growing uncertainty in the broader financial market has weighed heavily on the crypto industry marked by plunging deposits, layoffs, and multiple legal hurdles. On May 30, Nansen, one of the leading blockchain analytics platforms revealed it will slash nearly 30% of its workforce citing a prolonged crypto bear market that has continued since last year.
Singapore's Temasek cuts pay for staff responsible for FTX investment https://t.co/1QQCWSlyjQ pic.twitter.com/SA0x1VBdQl
— Reuters (@Reuters) May 28, 2023
Furthermore, on May 29, Singapore investment firm Temasek Holdings cut the compensation of its senior management and the investment team following a staggering $275 million investment loss incurred after the collapse of FTX. In addition, leading crypto exchanges such as Coinbase and Huobi have also announced mass layoffs to combat the current market jitters.
