Has Wall Street Forgotten about Bitcoin and Blockchain?
As we have experienced ourselves here in the Steem ecosystem, prices have a clear correlation to interest to cryptocurrencies. Many have even drawn a correlation between Google term searches and the prices themselves. While they have seemed to have stabilized, the low prices have seemed to slowdown the efforts of Wall Street firms that had previously been salivating at the opprortunity to get involved in the trading of cryptocurrencies. This is not surprising considering that most Wall Street firms love being involved in volatile markets as it provides them the volumes and trade flow needed to make great profits. They have historically made more profits in volatile markets than those that are stable as seen in Q3 2018 where trading profits were at all time highs for most of the firms.
Despite all of the Wall Street firms annoucing plans to setup trading desks for institutional clients last year, none have officially come through with the plans. Some say that regulation was the main culprit of the delays but other say that it was the custodial constraints they have had. However, most of those custodial issues have been solved with a number of large institutions coming in to fill the space for these needs such as Coinbase, Fidelity and others. It is interesting to see where many of the firms stand so far:
- Goldman Sachs: currently involved in clearing futures contracts as well as investing in its own custodial solution BitGo Holdings Inc. While hiring a lead to head up Digital Assets, they mention regulators limiting their reach in their brokerage division.
- Morgan Stanley: Hired a Head of Digital Assets and is said to be able to offer swaps tracking bitcoin futures but are still testing client demand.
- Citigroup: has designed products to act as a proxy to cryptocurrencies without having to own them but regulators have not given the go ahead.
- Barclays: Aggresively hired leaders to create a trading desk which ultimately did not proceed and immediately shut down as the resources left the company.
However, despite these signals from the main financial institutions, there are clear pathways forward for institutions to become involved. It seems that mostnof the infrastructure to support Cryptocurrency trading has been built already which makes it more available once demand picks up or regulation is clarified. In addition, we all know about the highly pumped projects from Bakkt and Fidelity which are behemoths given their access to millions of potential clients and billions in assets. Another great trend are the large endowment and pension funds that seems to be testing out to waters as many studies have been made to support the fact that due to the uncorrelated nature of their performance, cryptocurrencies could add value to their portfolios with small allocations. Yale has been one of the most prominent to have made that step recently.
”It appears as if progress is coming to a halt, yet nothing could be farther from the truth,” said Eugene Ng, a former Deutsche Bank AG trader in Singapore who has set up crypto hedge fund Circuit Capital. “The bear market is going to allow many of these institutions to build the proper foundations without rushing to build-out infrastructure without adequate testing for fear of missing out on a gold rush.”
While the bear has put the market and investors into hibernation mode, the infrastructure behind the foundation will be available when needed. This will be a fundamental improvement to allow an increase in adoption as long as key aspects of uncertainty are clarified. This includes custody services and security as well as the interfaces to help clients treat crypto assets similar to regular traditional assets currently traded. It may take time but the legwork seems to have been put in for a great future!
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Like you said, It's just a matter of time before big institutions get on board. It's an opportunity to broker another asset class. I'm guessing they are all pretty bitter that they didn't come up with idea themselves or get on board sooner. Now they are trying to figure out how they can make it work for them and/or gain more control over it. Just my thoughts anyway.
Posted using Partiko Android
More bitter that they cannot control it without dramatically changing how things work today!
Posted using Partiko iOS
Yes, Agreed
Posted using Partiko Android
I prefer Wall Street to remain out of cryptocurrencies to avoid future manipulation of prices as they have done so many times before.
Agree as well, good points to consider!
Posted using Partiko iOS
Yeah, it is going to be interesting to see what benefits that one of these companies will gain from being first to market.
The ones that are still pushing progress in the bear market will be the ones to reap the most rewards when it turns around. Just waiting to see if and when the sec is going to make more regulations and decsions about the space
Posted using Partiko Android
Agreed! Regulation continues to be the barrier for increased adoption but it is only a matter of time before a framework is released!
Posted using Partiko iOS
Somewhat but fidelity I know is still pushing hard for it they have been one the the biggest supporters. The thing is we are heading into a rather lackluster 2019 and 2020 in terms of growth and stocks are going to get hammered because of it. People will turn to other methods to start to build faster income and cryptocurrent might very well be one of those if it can position itself well during these slow times.
Fidelity will be able to provide the first taste of these assets to investors in a secure environment and has the potential to immediately increase adoption.
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I don't think so. Bitcoin will soon rise
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we'll all be better if wall street keeps their noses out of our space completely if you ask me