Wall Street and Cryptocurrencies

Do as we say, not as we do

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Despite flipping between silence and condemnation, Wall Street slowly advances further and further into the cryptocurreny sector. One of the more vocal Wall Street critics was JP Morgan CEO Jamie Dimon, who reportedly called Bitcoin “a fraud” during an investor conference. Dimon has softened his stance from his comments last year where he called Bitcoin investors “stupid” and saying that they would “pay the price” of those investments.

Whatever Wall Street or corporate America says about cryptocurrency, it would be more valuable to judge them based on their actions and this week we saw Morgan Stanley moving forward with plans for Bitcoin derivatives; namely “swap” contracts that will allow investors to go long and short Bitcoin. Swaps are the most traded instrument in traditional currency markets, with $2.4 trillion daily volume as of 2016. Bringing swaps to the cryptocurrency market is a sign that the market may one day mature to rival the fx markets.

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Alongside Morgan Stanley, fellow investment bank, Goldman Sachs have confirmed that they are creating a crypto trading desk, whilst the company are also seeking to provide custodian services in the market. The owner of the NYSE recently announced that they were joining forces with Microsoft, BCG, and Starbucks as they launch their “Bakkt” cryptocurrency exchange and Fidelity, one of the world’s largest asset managers have recently been making their own moves, with the acquisition of a 15% stake in the Neptune Dash project.

These types of moves suggest that the big names of Wall Street are envisioning a future for cryptocurrency that exists beyond the blockchain technology. It’s not far-fetched to suggest that Wall Street are staying quiet on the future of cryptocurrencies while they ready their own market offerings. Whether this is a hedge against disruption, or something larger, we still must do as they do.

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