Financial Firm Cowen Unveils Digital Assets Unit
Company formed division in response to increasing demand from crypto-native firms, asset allocators and multi-strategy hedge funds
Drew Forman, Head of Cowen Digital | Source: Cowen Digital
key takeaways
- Cowen’s hundreds of institutional clients could present a ‘captive audience’ for its digital-assets services
- The firm’s investment management unit had around $16 billion under management at the end of 2021
Financial services firm Cowen has launched a digital-asset division as it seeks to lead US banks in the growing segment.
Called Cowen Digital, the Connecticut-based unit offers cryptocurrency trading for institutional investors, as well as custody solutions via Cowen’s partnership with PolySign’s Standard Custody and Trust Company.
“Cowen Digital’s team has had calls with hundreds of potential clients including crypto-native firms, asset allocators, and multi-strategy hedge funds looking to participate in the space,” a spokesperson at the bank told Blockworks.
Cowen partnered with PolySign last May to offer its clients easier access to crypto. Dan Charney, co-president of the bank, said in a statement Wednesday that Cowen Digital has been trading crypto on behalf of its clients for several months.
The division is currently trading 16 cryptocurrencies including bitcoin, ether, chainlink, uniswap, polygon and decentraland, according to a representative.
Cowen Digital will seek to offer financing solutions, derivatives and futures in the future, the company announced, as well as “institutional DeFi and NFT access.”
New York-based Cowen operates as a broker dealer and an investment manager. Its broker dealer division offers investment banking services, equity and credit research, sales and trading and prime brokerage, as well as global clearing and commission management services.
The investment management unit provides actively managed alternative investment products. Cowen reported having $15.8 billion in assets under management, as of Dec. 31.
Drew Forman, who has worked as a managing director and head of equity derivatives for the company, will lead Cowen Digital.
“Cowan has quite a large custody and clearing business, so that means they have hundreds if not thousands of institutional clients that trade through them,” an institutional crypto trading source told Blockworks. “It’s a captive audience and it’s very early. Zero banks offer this.”
Some of the largest Wall Street banks have so far only dabbled in crypto as regulation in the US has yet to take shape.
Goldman Sachs recently added to the types of crypto products it trades. Galaxy Digital Holdings announced Monday that it facilitated its first over-the-counter crypto transaction with Goldman in the form of a bitcoin non-deliverable option.
Ben McMillan, founder and chief investment officer of IDX Digital Assets, said that the move by Goldman is likely to spur other banks to follow suit.
For a bank to launch a digital assets division takes “a huge amount of coordination,” a Cowen spokesperson said, noting that the company spent more than a year establishing the unit.
“Cowen’s organizational structure and in-built entrepreneurial culture means that it can be more nimble when it comes to entering innovative markets like digital assets,” the representative said.
About 40 people across the firm helped establish the unit, and the company intends to grow Cowen Digital to include more than 100 people in the near term.
Cowen Digital is currently able to trade in 35 states and plans to expand globally, a spokesperson noted. It has applied for a BitLicense to operate in New York and is awaiting a response from regulators.
Michael Bodley contributed to this story.
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