BEIJING • Mr Richard Liu gave up a seven-figure salary this month to get into one of the hottest financial instruments around right now: initial coin offerings (ICOs).
The former China Renaissance dealmaker has since backed a clutch of cryptocoin sales that has raised millions - sometimes in seconds - often without a single product.
From Hong Kong and Beijing to London, accomplished financiers are abandoning lucrative careers to plunge into the murky world of ICOs, a way to amass quick money by selling digital tokens to investors sans banks or regulators.
Cut out of the action, a growing cohort of banking professionals are instead applying their talents towards buying or hawking cryptocurrency. They are going in with eyes wide open. For Mr Liu, 30, who put together some of China's biggest tech deals in his old job, the chance to shape the nascent arena outweighs the dangers of a market crash or crackdown.
Loosely akin to initial public offerings (IPOs), ICOs have raised millions from investors hoping to get in early on the next bitcoin and their unchecked growth over the past year is such that they have drawn comparisons with the first ill-fated dot-com boom.
Yet, with stratospheric bonuses largely a thing of the past, the allure of an incandescent new arena far from financial red tape has proven irresistible to some.
Mr Liu, partner at hedge fund FBG Capital which has backed about 20 ICOs, said:"Unlike the traditional financial sector, there are no ceilings or barriers. There's so much to imagine."
Critics say many ICOs are built on little more than hyperactive imaginations. A cross between crowdfunding and an IPO, they involve the sale of virtual coins mostly based on the ethereum blockchain, similar to the technology that underpins bitcoin. But unlike a traditional IPO, in which buyers get shares, getting behind a start-up's ICO nets you virtual tokens - like mini-cryptocurrencies - unique to the issuing company or its network. That means they grow in value only if the start-up's business or network proves viable, attracting more people and boosting liquidity.
That is a big if, and the sheer profusion of untested concepts has spurred talk of a bubble. The United States Securities and Exchange Commission signalled greater scrutiny of the red-hot sector when it warned on Tuesday that ICOs may be considered securities, though it stopped short of suggesting a broader clampdown.