Cryptocurrency- Talos is a startup that provides a platform and tools for traditional Wall Street firms to trade crypto.
- Despite the digital asset sell-off this year, Talos has seen record growth, according to CEO Anton Katz.
- "It may not be the best time to trade, but it is the best time to build an infrastructure that's sustainable," Katz said.
As the air hissed out of the crypto blimp this year, and one debacle after another left investors with portfolios resembling the Hindenburg, one could've imagined traditional financial institutions taking a victory lap. After all the hoopla, decentralized finance challengers weren't looking like such superior alternatives, after all.
But for the most part, that hasn't happened. Old school Wall Street, slow to warm to digital assets, has only tightened its embrace amid the crypto winter that has seen trillions in value go up in smoke.
That's the lesson coming out of Talos, a unicorn startup that provides the infrastructure and tools to trade digital assets for a variety of Wall Street institutions, from banks and hedge funds to custodians and OTC dealers.
"For the vast majority of organizations, we have seen unwavering support of digital assets," Talos CEO Anton Katz told Insider in a recent interview.
Talos, which raised $105 million in a Series B round in May at a $1.25 billion valuation, has seen its business boom over the past four months even as the market has plummeted, according to Katz. Headcount over the past year has grown from 30 to 80, and it's still aggressively hiring, Katz said.
"The growth right now is the fastest we've had ever," he said, adding that second-quarter performance — across a variety of metrics including new clients and signed contracts — was the best in the company's four-year history.
"You wouldn't expect that in this kind of market," Katz said.
Katz is hoping to harness this momentum to become Wall Street's go-to platform and provider of digital asset tools, such as sourcing liquidity, price discovery, automated execution, post-trade clearing and settlement, and lending and borrowing.
Talos' growth spurt amid the digital asset sell-off is attributable to several factors, Katz said.
The company's initial client base was dominated by buy-side investors, especially quant trading shops. While hedge funds have dialed back risk as prices cratered, trading volumes have nonetheless surged amid the volatility.
That has meant increased demand among these clients for quick access to liquidity providers, price discovery, and instant trade settlement — all bread-and-butter services for Talos.
"If you're in the middle of a very busy, hardcore trading day – this is the stuff you would use," Katz said.
The company's clientele has evolved since the early days, and now nearly half of its customers are what he lumps into a bucket called service providers — banks, brokerages, lenders, OTC dealers, and custodians providing digital asset offerings to their own customers.
These types of institutions hew toward the conservative side, but they haven't been scared off by the crypto crash, and business has grown from this group, too, Katz said.
It helps that much of the pain — some $2 trillion worth of crypto value lost and counting — has been shouldered not by big companies but rather individual, Main Street investors.
But additionally, many large institutions committed to the crypto space over the prior two years, allocating budget and teams to build a presence, and "those institutions don't usually switch on a dime," Katz said.In reality, Katz said, a down market is often an easier time to get up to speed, when you can put your head down and focus on the fundamentals with fewer distractions.
"It may not be the best time to trade, but it is the best time to build an infrastructure that's sustainable," Katz said.
After all, he points out, Talos was launched during the last crypto winter in 2018.