The giant Morgan Stanley is diving deeper into the cryptocurrencies world, and it has some plants to offer Bitcoin swap trading for clients, joining other top banks in a sector-wide effort to explore digital currencies.
Derivatives which grant investors exposure to the performance of Bitcoin
According to some sources, the bank is going to provide derivatives that grant investors exposure to the performance of the largest cryptocurrency in the world – Bitcoin – in that way copying existing plans from the Goldman Sachs and Intercontinental Exchange of Wall Street among others.
The product is set to go live, but the strategy is to wait for the right volume of demand from institutional clients.
Morgan Stanley, which was clearing Bitcoin futures for its clients, is really the newest bulge-bracket bank to dive deeper into the market for cryptocurrencies. The bank did not say that it is trading Bitcoin itself.
This move comes half a year after the bank said it would follow Goldman in clearing Bitcoin futures contracts. Meanwhile, Goldman Sachs is exploring a custody product for cryptocurrencies, and it is already actively trading bitcoin futures, as well as other products bound to the digital coin.
Traders will have the chance to go either long or short with the use of so-called price return swaps; Morgan Stanley is going to charge a spread for each transaction. Trading is going to start once an internal approval process is complete and there is proven client demand.
One spokesperson from Morgan Stanley was not immediately available for comment.
Goldman Sachs working on non-deliverable derivative
News about the foray into cryptocurrency assets of Morgan Stanley comes as other Wall Street titans start some similar campaigns into digital derivatives. The plans of some major institutions for Bitcoin interaction meanwhile remain a hot topic of debate within the cryptocurrency industry. Some reports that Goldman had since shelved its crypto trading desk plans sent confusion through markets last week, while senior executives at the bank subsequently called those fake reports news.
Goldman Sachs clarified last week that the bank is working on a type of derivative for Bitcoin which is called non-deliverable forwards due to client demand.
The chief financial officer of Goldman Sachs, named Martin Chavez, said that the assets are going to be settled in U.S. dollars and that the reference price is the Bitcoin-dollar price as established by a set of exchanges.
The interest of Wall Street in Bitcoin
The Wall Street giant was debating the launch of some sort of cryptocurrency option over the last 12 months, but it has never been entirely clear just what the bank had in store.
The burgeoning interest of Wall Street in crypto comes despite a yearlong side in the value of Bitcoin, which lost more than half its value over the last 12 months. Despite the intensifying interest in Bitcoin, as well as other cryptocurrencies of Wall Street, the market for such assets has plummeted this year. Bitcoin is down more than 50% in 2018.
Morgan Stanley has yet to either confirm or deny all of this information, which nonetheless has already started circulating among cryptocurrency figures, which include the CEO and founder of Digital Currency Group, named Barry Silbert.