According to some reports from recently, Wall Street quietly moves out of the cryptocurrency market. While the market is still battered by news of fraud, as well as imminent regulatory crackdowns, there has also been a time when it looked like Wall Street had started to warm up to the rise of crypto assets.
Goldman Sachs and Citigroup Inc. showed interest in crypto
In 2017, when the cryptocurrency industry enjoyed what has probably been the greatest bull-run in its history, it looked like a lot of the mainstream financial companies have also been prepared to join the bandwagon. Some names such as Goldman Sachs, Fidelity Investments, as well as Barclays Bank Plc. were all affiliated with reports about opening crypto divisions, and such speculations sent ripples all over the financial industry.
Goldman Sachs was actually one of the primary Wall Street firms which showed some interest in the Bitcoin futures, and some rumors claimed that the firm has been working on the development of a separate crypto trading desk.
The investment bank also partnered with Galaxy Digital and led to about $57 million series B investment in custodian firm BitGo Holding Inc. trying to offer custody services. After one year later, Goldman is still to provide crypto trading. The Bitcoin derivative product of the bank did not make a lot of progress since it launched.
Citigroup Inc., which is based in New York, also developed a crypto-based product which could actually help asset management firms and hedge funds reduce the risk they actually get exposed to when they invest in crypto. The product, which is known as Digital Asset Receipt, has been expected to provide cryptocurrency investors with an innovative means of keeping tabs on their investment, as well as offer an extra layer of legitimacy and trust to the fledgling asset class.
Barclays Inc. British bank showed interest in crypto
After these two, we have the Barclays Inc. bank based in London. The British bank has proved a considerable interest in the crypto industry at the time of the boom, hiring energy traders Chris Tyrer, as well as Matthieu Jobbe Duval to help in leading its digital assets division. Both of them were employed to help look into avenues where the bank could make a foray into the crypto world, as well as provide recommendations, mainly as rumors swirled that it has been considering developing a crypto trading desk of its own.
Unluckily, Tyrer ended up leaving earlier in 2018, while Duval remains with the firm. Additionally, to that, Barclays also denied any rumors of the cryptocurrency trading desk.
What actually happened?
As of the report, there are two significant reasons for this quiet withdrawal of Wall Street in the market. The first one is the downturn in the market and the second one is the lack of a regulatory framework on cryptos. The first one is relatively simple.
This year was a wild ride for the crypto market, with almost $700 billion being wiped off. Some crypto-based firms are still feeling the brunt of this bear market, with some news of retrenchments, as well as companies folding up and manufacturers losing their profits every day.
It is also believed that the continued lack of a specific regulatory framework on cryptocurrencies continued to deter big names in the financial industry from taking the plunge into the sector.
Hopefully, the new year is going to see a rejuvenation in the crypto industry and the introduction of clearer crypto regulations.