Mad Crypto: Wall Street talent is fleeing crypto, and a cultural war might be behind it

"The theme is that some crypto teams are incompetent and/or ethically challenged."

As a crypto journalist, it is certainly not the most outrageous DM to find its way to my Telegram. The message, sent after I broke that ex-Wall Streeter Rob Salman had left CoinList, might shed light on the slew of finserv exits we've seen from the crypto world. Salman, for those who might not be familiar, was one of IEX’s early employees.

Salman’s six-month stint at CoinList followed news that Jamie Selway — who led ITG's North American business — left wallet provider Blockchain, where he led the firm's institutional business. He was there for seven months. That followed news that Instinet's former CEO Jonathan Kellner would no longer be joining Coinbase as its institutional head. 

At first glance, the explanation behind these exits seem obvious: Wall Street talent isn't cut out for the new paradigm of magic internet money. Or possibly, it's that the crypto world isn’t ready for Wall Streeters to build the foundation for large investors to enter the market (thanks, bear market). Indeed, these are some of the explanations I received from companies whilst reporting on these exits. But closer examination reveals recent headlines might actually show a deeper identity crisis underpinning the industry.

"There is a story," one crypto exchange executive texted me. "It is very much a cultural war."

In recent months, Wall Streeters have been plucked from the hallowed halls of the some of the largest brokers and investors to bring the market to the next level, insiders say. But when those very folks tried to bring Wall Street's rules and standards to crypto, they were immediately met with impediments and blockades from crypto native leadership. 

This isn't to pick specifically on the three aforementioned firms, to be sure. And it is not to say that any of these firms are engaging in illicit behavior. We are just dealing with two different, possibly incompatible, cultures. On Wall Street, folks know they need to cooperate with other market participants, and that working fast and breaking things doesn't necessarily work.

"There are two very different cultures," another source said. "For instance, JPM and GS might be involved in a joint venture together."

U.S. equities market participants are known for rallying around issues of mutual concern. Nasdaq, NYSE, and Cboe have joined forces to sue the SEC over a pilot that would shake up stock trading - the so-called transaction fee pilot - to preserve their view of what market structure should be (and of course their own bottom-line). Still, such cooperation is a bit more superficial in crypto. 

Good luck seeing such cooperation between Tyler Winklevoss and Brian Armstrong on something. 

It's a harder feat because many of the firms in this space think like an Uber or Facebook. In Silicon Valley, firms don't have to cooperate with their rivals, and breaking things and moving fast is the norm. It's harder to run a financial services firm like that. 

It's not clear if this mindset will work in favor of - or against - crypto's long-term adoption.