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

article-image

Drew Forman, Head of Cowen Digital | Source: Cowen Digital

share

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.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

HYATT REGENCY SALT LAKE CITY

TUES, OCT. 8, 2024

Guided by the expertise of Blockworks Research Analysts team, this one day event will feature senior leaders, entrepreneurs, and developers from across the crypto industry. Attendees will have the opportunity to participate in an immersive experience to explore the latest trends, […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

hivemapper.jpeg

Research

We believe crypto market participants overlook Hivemapper’s fundamental potential due to a poor understanding of both the niche map data market and Hivemapper’s positioning relative to incumbents. Hivemapper’s token model catalyzes both a cost and product advantage via unmatched map freshness and near real-time accuracy, which is its wedge into a market characterized by stale data and high data collection costs. Its current and potential future product suite may represent one of the strongest possibilities for PMF in crypto today.

article-image

👨‍⚖️ SBF’s courtroom sequel: Plus, Coinbase’s legal loss was DeFi’s gain

article-image

Public mining companies have been acquiring sites, refreshing machine fleets and diversifying business models in preparation for the event

article-image

Exploit shows centralization can sometimes be an asset

article-image

The Fidelity Ethereum Fund, like other proposed ETH ETFs, seeks to stake a portion of its assets, according to the firm’s Wednesday registration statement

article-image

The DAO first voted on enabling SAFE transfers over a year ago