A Conversation with Nelson Minier, Head of OTC Sales & Trading at Kraken

The following transcript is taken from episode seventeen of The Scoop, The Block’s first podcast. Listen below and subscribe to The Scoop on Apple, Spotify, Google Play, Stitcher, or wherever you listen to podcasts. Email feedback to [email protected]. This transcript has been edited for clarity and length.

Nelson Minier has a long and storied history before joining cryptocurrency exchange Kraken's OTC desk. The 20 year veteran of Wall Street joined The Scoop to talk about his time in trading that's spanned firms such as JP Morgan, Credit Suisse and Bear Stearns (one of the most notable casualties of the financial crisis). Based in San Francisco, Kraken is one of the oldest crypto currency exchanges in the market, it's also one of the best known but the company has been expanding recently into new lines of businesses including futures and over the counter trading. Kraken's OTC business was built up by Minier and it counts a number of high net worth individuals and asset managers among it's clients. On this episode of The Scoop, Minier, who was once the worlds largest Venezuelan bond trader shared his stories about being a trader during the financial crisis, how he built up Kraken's OTC business and straddling the line between the worlds of traditional and emerging financial services.

Frank Chaparro Ladies and gentlemen thank you so much for tuning into The Scoop. We have a really interesting/special episode, the head of OTC at Kraken, Nelson Minier is joining myself and my wonderful colleague Matteo Leibowitz for conversation about all things trading OTC in crypto. It's funny Nelson, this is the first time we met in person but about a year and a half ago when I was at Business Insider I wrote a story titled: "A Veteran Wall Streeter Has Left Credit Suisse For A Crypto Trading Desk" and that story was about you. It's been, so that was April 10th, you had been talking with Kraken for several months before and here we are, July almost August 2019. The team's at 19 people you said, you consider yourselves to be one of the largest operators in the space for sure. Tell us about that journey.

Nelson Minier You know it feels like an eternity ago now that you mention it but it really wasn't that long ago.

Frank Chaparro We both maybe picked on a few pounds.

Nelson Minier Yeah exactly. And you know we when I first walked in at OTC there was only a couple of us trading and you know Jesse wanted to do a 24/7 trading operation. And at the time this seemed pretty daunting you know it's not easy I ran 24 hour desks before being in emerging markets as I was in the past. Most of those things where there's effects or bonds or whatever run 24/7. But at a traditional bank you have all the infrastructure, they are already set. So you're just kind of plugging in, this was a little different in the sense that an exchange runs 24/7. But you know it's those are bits and now you need people, people there to pick up the phone, people there to answer messages, people there to do trades on sometimes very liquid products. So it was pretty daunting. But with a lot of hard work, meeting a lot of great people, the space itself is attractive and consequently we were able to attract some pretty good talent. Traders that are much better than I could ever trade.

Frank Chaparro Walk us through what a crypto exchange OTC desk looks like relative to... You have big players out there like DRW who are sometimes taking principal positions on a trade.

Nelson Minier So do we. We're only allowed to take principal positions, we trade the firm's money. So if you come to us and want to sell a thousand bitcoins we take it down as our risk. It's not like we have the other side of the trade. It's our risk if it falls and drops a thousand points then we shed a lot of tears. But it's our risk. What does a trading desk look like? Typically a global desk, they trade in three zones. You trade you know the U.S. zone you trade the Asian time zone and then you trade the European time zone and we are set up very similar to that. We have traders in San Fran, Vegas, New York and then in Asia we have traders in Tokyo, Taiwan, Singapore, Hong Kong and in European time zone we basically just cover it through London but those guys are on a plane all the time. We have one guy today in Spain, another one in Dubai trying to make connections and relationships.

Frank Chaparro And the point is you'll have a large trader, either a whale of sorts, a wealthy person, an institution who will come to you because they want to break up their trade over a certain amount or over a certain timeframe to avoid the slippage that comes with trading on exchange.

Nelson Minier Exactly. That's well said. Pretty much you have institutions high net worth individuals. OG's in the space we do particularly well with the OG's. And they come to us because they want to trade and they want to do it efficiently. They want white glove service. They know they're doing pretty big size and they want to make sure that they're talking to somebody and feel more comfortable talking to somebody that's going to be moving that much money and sending them a wire or receiving coins like, hey did you get my coins? Yeah I got em' man, they're ri