Crypto Is Booming Again in New York as Sentiment Turns Positive

(Bloomberg) — Cryptocurrency startup Concrete’s recent move from the San Francisco Bay Area to New York’s Meatpacking District could be emblematic of a burgeoning digital asset renaissance in the Big Apple.

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More than a dozen crypto-related companies, large and small, have opened offices or plan to do so this year. Much of the change comes as general sentiment toward crypto becomes more positive as the sector recovers from several years of turmoil. Then Silicon Valley turns its attention to the recently popular artificial intelligence sector.

The recent crypto bear market, combined with increasing regulatory pressure in the US, led to an exodus of crypto startups and founders from the city over the previous two years. Since then, the US Securities and Exchange Commission has faced setbacks in its long-running battle with the industry. The approval and launch of Bitcoin exchange-traded funds in the US earlier this year was also heralded as a significant event for the sector.

“I think very optimistically [of] “The current outlook is,” said Concrete CEO Nic Roberts-Huntley.

The industry is also hoping that the upcoming presidential election will lead to a more crypto-friendly White House, with former President and Republican presidential candidate Donald Trump, once critical of the industry, now one of Bitcoin’s biggest supporters.

“Obviously, if we see a Republican administration coming in, that could be more bullish on cryptocurrencies in general, which is great,” Roberts-Huntley said.

Several prominent crypto leaders, including Jesse Powell, co-founder of cryptocurrency exchange Kraken, and Tyler and Cameron Winklevoss, co-founders of New York-based cryptocurrency exchange Gemini, have announced donations to Trump.

“Everybody is just following along and saying, oh, this is looking good for crypto,” Mirza Uddin, head of business development at blockchain startup Injective Labs, said from his office in the Flatiron district. “So I think the narrative has changed even in New York in recent months.”

More than 130 crypto firms currently have offices in New York, with 20 of them specifically targeting decentralized finance, 14 targeting non-fungible tokens and 13 targeting centralized finance such as crypto exchanges, according to crypto venture fund Archetype, which tracks crypto-related firms in the city.

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“New York City has always been thought of as the financial capital… the fashion capital, the cultural capital,” said Katherine Wu, a venture partner at Archetype, noting that as crypto becomes more prevalent, it’s only natural that it will become easier to build and hire in the city.

Seattle-based Eigen Labs, which has raised $100 million from venture fund Foresight, blockchain project Plume and Andreessen Horowitz, plans to open New York offices in 2024.

They will join crypto asset manager Superstate, crypto community-focused program Hadron FC, algorithmic crypto platform Tread.fi, and digital asset venture funds Dragonfly and Blockchain Capital, all of which set up shop in New York this year.

A week after Concrete moved to the Meatpacking District last month, venture capital fund Coinfund hosted a happy hour attended by more than 300 crypto enthusiasts a stone’s throw from Concrete’s office.

Even the Blockchain Science Conference, which has been held at Sanford University since its inception in 2017, will take place this month at Columbia University in New York.

“As a founder, I gravitate toward places where other founders are innovating in the same space,” said Zorayr Khalapyan, co-founder of Blackwing and a longtime Bay Area resident. “We’ve seen more crypto companies being founded in New York.”

San Francisco focuses more on AI, and Khalapyan said if he were starting a company in that space, he would still be there. He also spent time in countries like South Korea, Singapore, and Vietnam before moving to New York last June.

Deja Vu

The crypto wave is reminiscent of 2021, when Coinbase established its first New York office in Hudson Yards and Ava Labs, the firm behind the Avalanche blockchain, opened a permanent office in the city. That year, even Mayor Eric Adams pledged to make New York a crypto hub.

Tarun Chitra, who runs crypto risk modeling firm Gauntlet in Manhattan and is a longtime resident of the city, recalled that a large number of founders and trading firms were moving to the city at the time.

According to Archetype’s Wu, there is even a “Crypto Street” in the Soho district, where crypto companies like Uniswap Labs, dYdX Trading, OpenSea, and more are concentrated. Archetype is also in this area.

New York state maintains some of the strictest crypto regulations in the U.S. The state has required digital asset providers to be licensed under a program called BitLicense since 2015, which has led to an exodus of crypto companies including Kraken.

It remains to be seen whether the newfound enthusiasm will continue. There are still a few uncertainties about the outcome of the presidential election and what might happen even if Trump wins.

“It’s a little early to see that kind of downside impact,” said Tom Schmidt, a general partner at Dragonfly. “This kind of shift in sentiment in politics has happened over the last four months, I don’t even know what the meaningful downside policy changes would be.”

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