The word is out: Wall Street is warming up to crypto. “The industry is seeing unprecedented institutional interest for the first time in Bitcoin’s history,” said Paul Chao, a former trader at Goldman Sachs who set up regulated bitcoin exchange LedgerX. “I’ve been amazed that the strongest believers in cryptocurrency often start out the most skeptical. But at some point the perception shifts, and for many institutions – I think we’re finally there.”
Chou’s enthusiasm is in line with a recent Thomson Reuters survey that reveals one in five financial institutions have plans to start buying and selling crypto in the next 12 months. Here are four financial institutions that either already have – or will shortly – incorporate crypto into their trading platforms.
Goldman Sachs, one of the most prestigious financial institutions, is opening the first Bitcoin trading operation at a Wall Street bank. While they will initially only be trading futures contracts linked to Bitcoin’s price, Goldman executives are looking at moving in the direction of buying and selling actual Bitcoins.
CME and CBOE
“Futures are the first phase in bringing the Wild West of digital currencies to the mainstream. Next steps are ETFs (exchange-traded funds) and other national stock exchanges adding their own flavors of derivative products,” said Charles Hayter, CEO of the digital currency site Crypto Compare, providing commentary that, back in December 2017, showed great foresight given the rise in institutional adoption that we are starting to see now.
Nasdaq and Gemini Trust Company LLC recently announced a collaboration that would involve the cryptocurrency exchange leveraging Nasdaq’s SMARTS market surveillance technology to monitor its marketplace.
“Since launch, Gemini has aggressively pursued comprehensive compliance and surveillance programs, which we believe betters our exchange and the cryptocurrency industry as a whole,” said Tyler Winklevoss, CEO of Gemini. Our deployment of Nasdaq’s SMARTS market surveillance will help ensure that Gemini is a rules-based marketplace for all market participants.”
Meanwhile, Nasdaq is also looking into offering cryptocurrency futures. “I believe that digital currencies will continue to persist, it’s just a matter of how long it will take that space to mature,” CEO Adena Friedman said. “Once you look at it and say, ‘do we want to provide a regulated market for this? Certainly, Nasdaq would consider it.”
According to an unnamed insider, Morgan Stanley is moving quickly to add cryptocurrency to their trading products. “Truth be told, this is the next arms race,” said the source. “Everyone is rushing into cryptos. Everyone… It is the digital gold rush. And our firm wants to get there and pull as many levers as we can.”
In my opinion, the rise of institutional adoption in the crypto space goes to show that the mainstream finance world and the crypto space are not pitted against one another, but are rather working together to develop a financial landscape that provides more opportunity than ever before.
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