Young Wall Streeters are going wild for crypto. Their bosses don't know what to do about it.
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Matt Turner,Phil Rosen
Nov 28, 2021, 19:22 IST
Marianne Ayala/Insider
Welcome back to Insider Weekly! I'm Matt Turner, the editor in chief of business at Insider.
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Goldman Sachs polled its interns earlier this year on everything from posting to TikTok to the climate crisis. One takeaway: 21% said they'd invested in cryptocurrencies.
Given that Wall Street and its workforce are typically heavily regulated and tracked, I found this striking. In the past, financial institutions have waged war on their staffers communicating on encrypted messaging apps, such as WhatsApp. Now, they're facing a generation that's bypassing brokerage accounts to make investments from their crypto wallets.
At the same time, these firms are looking to get in on the crypto craze themselves, with Citigroup this week appointing an executive to lead a new crypto team. That could create new conflicts of interest and lead to a clampdown.
Until then, as Reed Alexander and Alex Morrell reported this week, young Wall Streeters are making bank on crypto. Read on for a Q&A on their reporting.
Reed Alexander and Alex Morrell take us inside their reporting on how young Wall Streeters are making crypto trades — and what banks' compliance departments are saying about it.
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What prompted you to look into young Wall Street trading crypto?
Reed: Alex and I had seen headlines about senior folks on Wall Street making bank on personal crypto trades. We were curious what junior bankers and financial advisors were up to — and how their firms might be thinking about oversight. Wall Street typically has a lot of rules around what workers can invest in, but we discovered that few have any guidelines in place right now that pertain to digital assets.
How are these Wall Streeters able to get around red tape and invest in crypto?
Reed: Cryptocurrency is still very much an emerging asset class, and many on Wall Street are scratching their heads over how to police it. Using digital wallets instead of their brokerage accounts is one avenue they're taking to buy crypto without having to turn over any information about their investments to their employers. But it's unclear how long this flexible environment may last.
How are banks responding to these crypto trades their employees are making?
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Alex: It's something of a mixed bag, but primarily it's watch and wait right now. Since most banks don't have significant business operations involving crypto, they're not taking great pains to clamp down on employee trading. That could change if banks get the go-ahead from regulators to embrace digital currencies. We're already seeing some signs of this at places like Goldman Sachs, which has been more eager to pursue crypto than some of its competitors.
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