Crashing the crypto party

Cryptocurrency markets have exploded in the last year hitting US$2 trillion dollars in value. BTC Markets chief executive Caroline Bowler looks at who is buying this popular new asset and why.


How much interest is there in cryptocurrency? What sort of people are attracted to your firm? Do you hire from within finance or from outside? 

Mostly we hire from outside the finance industry. There is only a handful of us in the company who have had financial markets experience. There is no one demographic. Working in crypto appeals to every age group.

We have college grads right through to people in their 50s. We have had people come from hotel management and retail and we have a former chef working with us.

We hire for skills and attributes. I m not going to find many crypto experts, so instead, I'm looking for intrinsic personal qualities. It's about culture, working collaboratively, and team building. I can teach crypto.

We have hired across all business functions in the last twelve months, and we expect to continue to do that for the foreseeable future. I'm sure any other crypto businesses are hiring like mad.

The one thing I say to people coming in is what they say to writers. Not to have a terror of a blank page since so much of what we do every day is brand new in Australia. No one has ever done it before. The rules are not yet written so people have to be okay with writing those rules themselves or coming up with best practices every single day. It is mentally draining and equally very energising particularly when you get further on in the job and you look back and see how far you've come.


Is it the excitement, the opportunity, or the money that grabs people?

It's not about the money. People coming in know the job is well paid but it's an afterthought. For me coming from traditional finance, the appeal is getting hands-on experience at shaping the new financial services and the digital economy and I'm in the middle of it all I would never have gotten this opportunity if I'd stayed in investment banking. Ever.

Recruits don't see cryptocurrency as part of financial services. They don't make that connection. They can see the opportunity in cryptocurrency.

 Don't get me wrong we don't spend our day sitting around talking about crypto. Instead, we think of solutions to problems that didn't exist a couple of weeks ago. How do we handle decentralised finance? What do we do with non-fungible tokens and how do we make that part of the business work? Do we deal with layer two protocols which are networks running on the top of the main Ethereum network?

These are all quite challenging mental concepts to get your heads around. It's fantastic but challenging.


What does the industry need to do to become catch up to other markets? 

We believe Australia is on the cusp of progressive legislation. The Senate Select committee on Australia as a technology and financial centre will release findings in the next week or two and that'll give us the clarity we need. That legislation will have to go through due process but at least we'll get direction.

All the indications are that we are looking at a Singapore-type structure that allows innovation. Regulation will allow Australia to keep up with the financial centres around the world.

Then the industry can really let fly. Lack of regulation is the biggest hindrance to our growth. Knowing that regulations are coming soon means we can plan and adjust for them and build accordingly. 

With crypto hitting the mainstream in 2021, investors are increasingly choosing this digital asset class. Do cryptocurrency holders see crypto as a real asset class or a payment mechanism. Who is buying?

It is an asset class and but there are different functions within that such as payments.

Currently, cryptocurrency attracts retail investors, although institutions are nibbling at the edges. We are still waiting for on and off-ramps to bridge the gap with the traditional financial world. We don't have those yet. As an industry, that's still being built out.

Then, you're not just looking at domestic trades but at international opportunities. Remember, traditional financial services is the largest economic sector in Australia so there is no reason to think there would be any limitations with crypto. It really is the future of finance, and so we are riveted by it.


What are the motivations for buying crypto? 

We see long-term investors, day traders, and companies who look at crypto from a corporate treasury point of view. Specifically, bitcoin is an anti-inflation play. Our research shows that the motivation for 70 percent of investors is to build wealth, followed by retiring early at 34 percent. The survey showed 28 percent bought crypto for portfolio diversification. We're seeing it being held alternative asset class in the portfolio construction process.

I don't think we will see it this year or next, but eventually, cryptocurrency will be viewed as another alternative asset. Institutional investors may prefer stablecoin, which are fiat-pegged digital currencies.

What are the challenges?

Crypto is an incredibly young industry. It has exploded and will continue to grow but it needs a bit more time to develop. Other than that, there are just not enough hours in the day.