TD Cowen Shuts Down Cowen Digital, Joining the Growing List of Crypto Unit Closures

In a surprising turn of events, TD Cowen, the American independent investment bank, made the decision to shut down its crypto unit, Cowen Digital, just over a year after its launch. The move has left many industry observers speculating about the underlying reasons for the closure, as no clear explanation has been provided by the bank.

Back in March 2022, Cowen Digital was introduced as a platform aimed at offering institutional clients exposure to the crypto market. It provided access to 16 prominent crypto assets, including Bitcoin, valued at $26,798, and Ether, valued at $1,855. Moreover, the bank hinted at upcoming services encompassing futures, derivatives, and decentralized finance, while actively expanding its team in Europe.

However, a recent email circulating online, which has been seen by outlets such as Bloomberg News, has revealed that Cowen Digital and its approximately 10-member team will cease operations as of June 1. Regrettably, the email failed to disclose the exact reasons behind this sudden decision, leaving the financial world in speculation.

This development follows the acquisition of Cowen Bank by TD Bank Group for a whopping $1.3 billion in August 2022, a deal that was finalized in March of this year. The closure of Cowen Digital arrives amid a series of crypto company collapses witnessed in the previous year and the ongoing regulatory challenges faced by the U.S. banking industry in 2023.

Interestingly, the email mentioned that the Cowen Digital team intends to carry on its work under a different organization. It highlighted their belief in the necessity of trusted counterparties with a profound understanding of institutional investors’ needs. The team expressed their commitment to continue providing high and low-touch execution, knowledge-driven content, corporate access, and group educational events, albeit in a new setting.

Notably, Cowen Digital’s closure marks the second institutional crypto client unit shut down within a week. Digital Currency Group (DCG), a prominent venture capital conglomerate, announced the closure of its prime brokerage subsidiary, TradeBlock, starting on May 31. DCG attributed this decision to the “prolonged crypto winter” and the challenging regulatory landscape in the United States. Reports from February also revealed that DCG suffered losses of $1 billion in 2022 due to the contagion stemming from the bankruptcy of the crypto hedge fund Three Arrows Capital.

With these recent developments, the crypto industry is witnessing a wave of closures and transformations as companies grapple with the evolving market dynamics and regulatory environment. The closure of Cowen Digital further underscores the need for adaptability and resilience in the crypto space as companies strive to find a sustainable path forward.