Category Archives: Morgan Stanley

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Morgan Stanley to Offer Clients Bitcoin Derivatives Trading

American multinational investment bank Morgan Stanley is reportedly planning to offer clients the chance to trade in Bitcoin derivatives, reports Bloomberg from an anonymous source.

The source, who claims to be close to the matter, shared with Bloomberg that the New York-based bank will be following in the footsteps of other Wall Street firms offering crypto-related services by dealing in contracts that give investors ”synthetic exposure to the performance of Bitcoin“. Investors will be given the option to go long or short using what is described as a ”price return swap”, with Morgan Stanley adding its own charge to each transaction that it facilitates.

Apparently, it is just waiting for enough institutional client demand and final approval for the internal processes to start offering these services, as the bank is already technically prepared for the Bitcoin trading.

While Morgan Stanley does not plan to trade in Bitcoin directly, the proposed services are tied to Bitcoin futures contracts. Any direct Bitcoin trading is unlikely to happen in the near future either, as CEO James Gorman has said customers will not be able to buy and sell directly through the bank.

Gorman has said, however, that the bank intends to build a cryptocurrency trading desk that will support derivatives of various digital currency assets. Andrew Peele, formerly of Credit Suisse Group AG, has been taken on by Morgan Stanley as head of digital asset markets to help institute this.

Goldman Sachs reaffirmed last week that it would not be abandoning its cryptocurrency trading desk, despite fake news report circling in the media. According to the firm’s chief financial officer Martin Chavez, the bank was even looking into expanding its crypto operations by launching a Bitcoin derivative.

Physical Bitcoin is not yet on the cards for Goldman Sachs yet, however, as Chavez explained: ”Physical Bitcoin is something tremendously interesting and tremendously challenging. From the perspective of custody, we don’t yet see an institutional-grade custodial solution for bitcoin, we’re interested in having that exist and it’s a long road.”

 

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Eleven Credit Suisse Staff Take Crypto Positions Elsewhere

Zurich’s branch of Credit Suisse has seen an exodus of staff, as they switch from banking to cryptocurrency over the past year.

The last to leave, Andrew Reel, has left the Swiss bank to become head of digital asset markets at Morgan Stanley also based in Zurich. But he’s just the tip of the iceberg when it comes to crypto defectors, with insider reports from the Swiss banking giant stating that 11 others have also departed on the digital career trail.

Three others have left CS bound for various positions at Crypto Finance, a Swiss company that aims to implement blockchain technology, and one to become head of trading. Two others have left the bank and set up Vision&, a self-described “Swiss-based, SRO-regulated asset manager facilitating access to innovative blockchain investment opportunities.” Since then, these two have reportedly launched the first actively managed blockchain investment product in Switzerland.

A crypto exchange in Zug, Switzerland’s Crypto Valley, called Lykke, has been the beneficiary of another Credit Suisse defector, which later saw the arrival of two further CS refugees. Two other companies have also snapped up leavers such as blockchain company Digital Asset and Schneider Digital Asset.

Apparently, all professionals in the Zurich banking market are well known to each other and it appears that they’ve all ended up at Credit Suisse at some time or another. One of the leavers commented:

“We all worked together on the trading floor…The community in Switzerland (and globally) was very compact a couple years ago. Our small blockchain cell of people entered the space rather early and shared knowledge.”

Reportedly its that fact the cryptocurrency and blockchain lend themselves to a better way of expressing the entrepreneurial spirit than banking. He added, “We found different ways to enter the crypto business but still keep close and exchange thoughts.”

Switzerland’s stock exchange, SIX, announced recently that it will open its doors to digital currencies. The new platform which is being built by SIX will offer integrated post-transaction services such as deal settlement and asset custody through DLT. SIX and regulated by Finma. The Swiss Central Bank, says that it plans to roll out its cryptocurrency service in the first half of 2019.

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Malta Passes New Laws to Claim World’s First Nation with Crypto Certainty

Malta has officially passed three bills into law to legalize cryptocurrency businesses in the country, claiming to make it the world’s first nation to provide legal certainty to the cryptocurrency field, according to Bitcoinist.

The bills passed their fourth and final reading on 4 July and as Bitcoin News reported recently, the bills are aimed at further regulation of cryptocurrencies. The three bills fall into three categories as follows:

-ICOs will now need to publish a white paper with fully transparent financial history details of the issuer for each new project needing funding through the Virtual Financial Assets Act.

-An industry-specific body will be sent up in order to support the deployment of the Malta Digital Innovation Authority Act which will promote the development of visions, skills, and other qualities relating to technology innovation.

– The Innovative Technology Arrangements and Services Act will facilitate blockchain-based enterprises being recognized as such under the law, and as such will be the basis for the previous two bills to operate.

New exchanges now know exactly what government requirements are before setting up a cryptocurrency business or exchange in Malta. Silvio Schembri, Malta’s Junior Minister for Financial Services, commented that companies can now operate in a fully regulated environment, which should attract more investment to the country’s already burgeoning cryptocurrency space.

Poland’s largest cryptocurrency exchange Bitpay announced this year that it was suspending its activities there. Due to lack of cooperation from Polish banks, the exchange announced that its BitBay operations were moving to Malta. Another coup for the country was the announcement that Binance had successfully opened a bank account there and would be operating from September 2018.

Malta has become increasingly appealing to Bitcoin companies conducting business there due to the island’s positive spin on blockchain technology and its open-minded approach to regulation, linked to a strong economy. It also boasts the largest cryptocurrency trading volume in the world, according to Morgan Stanley. With this new legal-certainty status for cryptocurrencies, the country’s claim as another European “crypto haven” to rival Switzerland may be well founded.

 

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Malta Banker Association Chair Says Crypto Will Make Banks Obsolete

Marcel Cassar, chairman of the Malta Bankers Association (MBA), has told The Malta Independent that cryptocurrencies may pose a significant threat to banks, possibly making them obsolete.

He suggested that the threat to banking of mainstream cryptocurrency adoption was because “their traditional role as main payment intermediary for funds and currency transmission will become challenged, if not obsolete”.

It is hardly surprising that such comments would originate from a banker in Malta given its current place in the crypto space. Malta has become increasingly appealing to Bitcoin companies conducting business there due to the island’s positive spin on blockchain technology and its open-minded approach to regulation linked to a strong economy. It also boasts the largest cryptocurrency trading volume in the world, according to Morgan Stanley.

Add to this Prime Minister of Malta Joseph Muscat’s recent plans to re-establish several cryptocurrency businesses in his country’s jurisdiction and it is clear that the country is preparing for a future with cryptocurrency. Malta already has pro-blockchain legislation and existing regulations around cryptocurrency, making this announcement an outreach for more cryptocurrency companies to locate in the Mediterranean country.

Cassar sees these technologies as positive for banking in the sense of blockchain offering unbridled and irrefutable authenticity to transactions and documentation, himself describing the benefits as “undisputed”, but sees any major significant changes by banks as still quite distant.

His comments that banks may well be made obsolete as the new technology really takes hold don’t extend to fiat currency. Some banks, he says, are filling a gap and profiting by just simply limiting their involvement to advice to customers regarding ICOs and custody services.

Independent.com refers to many banks’ current lack in innovation and energy in getting on board with the new tech, pointing to ex-Citigroup boss Walter B Wriston who in 1981 commented:

“The belief that a market is yours by some divine right is an old dream. Companies that fail to change become tombstones in the corporate graveyard.”

 

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Norway Joins Central Bank Crypto Queue

An official document has been released by Norway’s Central bank (Norge bank) announcing intentions of launching its own cryptocurrency, according to Cointelegraph.

This notice of intent by Norway’s State bank is very much in keeping with current trends showing increasing numbers of central banks looking into the viability of creating national cryptocurrencies. As Bitcoin News illustrated, the adoption of cryptocurrency globally by central banks is still in its infancy but is growing.

The 55-page document, released by the Norge Bank’s working group, referred to this trend, citing the advance of technology moving financial institutions beyond cash money. Norges Bank Governor Øystein Olsen wrote:

“Technological advances have brought this issue to the fore. A decline in cash usage has prompted us to think about whether at some future date a number of new attributes that are important for ensuring an efficient and robust payment system [should be taken into consideration].”

However, the bank is quick to point out that a central bank digital currency (CBDC) wouldn’t interfere with customers normal banking requirements, as long as demand continues to exist for cash. The working group, which is currently only in its initial stages, stated:

“It is too early to conclude whether Norge Bank should take the initiative in introducing a CBDC. The impacts of a CBDC – and the socio-economic cost-benefit analysis – will depend on the specific design. The design, in turn, will depend on the purpose of introducing a CBDC.”

As NewsBTC points out, while there is no specific law telling Scandinavian banks how to view cryptocurrency, there is anti-money laundering legislation already in place. These laws demand that those offering financial services must follow KYC practices.

Morgan Stanley strategist Sheena Shah released a report on central bank cryptocurrencies this month, focusing on the current situation regarding state adoption of cryptocurrencies globally. Shah explained that although many central banks are considering their own cryptocurrencies, the focus is simply financial stability.

Shah suggests that were emerging cryptocurrencies to be adopted, they would not be Bitcoin or any other public blockchain networks. She believes that a 100% digital system might enable banks to push interest rates into negative territory, a tactic used by banks in the past to spur the global economy.

Another Scandinavian central bank, Sweden’s Riksbank, is currently considering its own cryptocurrency, an e-krona, with the same motivations as its Norwegian neighbor having observed cash use on the decline across the country.

 

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