As big banks have officially announced digital currencies to be a legitimate long-term asset class, we believe there is an increased need for regulated trading venues, particularly regulation for derivatives trading venues, which are complex financial products.
With a dozen pivotal announcements by major global financial institutions in the past six months, one can expect an even larger wave of players to follow. Banking is a hyper-competitive, technology-centric industry. Smaller financial institutions need to spend as a matter of survival as major banks prepare for the next generation of financial technology. Financial institutions, having already embraced the digitalisation of finance, are prepared strategically and technically to move quickly. Don’t underestimate the speed at which transformation will accelerate. Banks are quietly moving to build infrastructure and design capabilities to deliver on the large consumer demand for digital assets.
As for regulators, there was more good news. Powell and Yellen consider Bitcoin to be “digital gold” and hence more accepted (and then not positioned as a challenger to the dollar).
These private and public developments establish a foundation for the entire digital asset ecosystem to explode, from mining chip designs to consumer applications and innovation to build digital tokens that may represent physical assets, or even less-tangible ones, such as data.
Entrepreneurs worldwide who are deep into blockchain will continue to roll out powerful technologies and creative applications for bitcoin and other digital tokens. The most significant application for the digitisation of assets is inevitable as a national currency. The US Fed admits that it is under genuine review while China has announced its digital-RMB.
Just about every big bank on Wall Street is working on ways to enter the digital currency space. Most recently, Fireblocks, a leading digital asset custody, transfer and settlement platform, raised $133mn in a Series C round into which Bank of New York Mellon was an investor. The bank plans to use Fireblocks’ tools for securely storing and transferring cryptocurrencies to serve as a custodian for digital assets.
Key highlights over the last quarter:
- JPMorgan Chase is creating a basket of 11 crypto-related stocks.
- Morgan Stanley plans to allow some clients to invest in bitcoin-related funds.
- Goldman Sachs restarts crypto desk
- CBOE Files to list VanEck ETF, starts the clock on SEC to respond
- State Street named Fund Administrator and Transfer Agent for VanEck ETF
- Blackrock, the world’s largest asset manager, plans to include bitcoin futures as eligible investments for two of its funds.
- PayPal, which already allows users to buy and sell crypto, confirmed earlier this month that it’s acquiring Curv, a technology firm that powers the secure storage of cryptocurrency.
- Visa to enable Bitcoin purchases at 70mn merchants
- Visa launches pilot program with Crypto.com to settle USDC on Visa Network
In addition to moves by traditional financial institutions, we have seen tech companies join the battle. Facebook (FB), Tesla (TSLA), Twitter (TWTR) founder Jack Dorsey, and legendary hedge-fund manager Paul Tudor Jones, Stanley Druckenmiller and others have also all invested in or are working on crypto-related projects.
The massive Bitcoin rally has induced Wall Street to embrace the trend before the likes of Coinbase take all the glory.