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JPMorgan Strategist Predicts Impending Heightened Crypto Interest from Wall Street

JPMorgan Strategist Predicts Impending Heightened Crypto Interest from Wall Street

With much talk in 2018 regarding Wall Street’s potential cryptocurrency uptake somewhat fading towards the end of the year, JPMorgan’s Global Market Strategist Nikolaos Panigirtzoglou is reigniting the flame.

The market needs to grow first, claims Panigirtzoglou, predicting the long-awaited and much talked about rush of institutional investment, but it is not going to be an overnight sensation. He argues: “The stability that we are seeing right now in the cryptocurrency market is setting the stage for more participation by institutional investors in the future.”

Partly, the slow uptake, according to the JPMorgan strategist, is regulators who are still a “bit slow to realize” the potential of the industry. A recent Circle report agrees, pointing out how ICO activity reduced in the second half of 2018 due to increased regulation, putting further downward pressure on the cryptocurrency market.

report points out that stablecoins, security tokens, and institutional crypto, by providing the solution of real-world problems and adding more certainty to the crypto space as a whole, are the next big thing. Last year, Cardano (ADA) co-founder Charles Hoskinson predicted that the entry of Wall Street into the sector would bring in “tens of trillions of dollars”.

Late last year, Wall Street’s previous crypto fervor cooled noticeably, with Goldman Sachs, Morgan Stanley, and Citigroup all shelving much publicized crypto-related products for a future date. Twitter CEO Jack Dorsey is biding his time and certainly holding on to his Bitcoin claiming it is “native to internet ideals”, and as such must be successful. Always resolute in his claims, Dorsey insists that:

“The world ultimately will have a single currency, the Internet will have a single currency. I personally believe that it will be Bitcoin.”

That being the case, Wall Street won’t be too far away when it happens.

 

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Wall Street Giants Delay Institutional Crypto Investments

Wall Street Giants Delay Institutional Crypto Investments

A columnist from Bloomberg delved into the not-so-noticeable limbo-state of Wall Street giants in regards to cryptocurrency investments as a result of what seems to be a rout in 2018. Captioned “Goldman Sachs, Morgan Stanley and many more built it. But they didn’t come”, the column went on to highlight the simplicity of the stall by Wall Street giants towards their premature acceptance of cryptocurrencies due to the earlier 2017/2018 Bitcoin bull run.

The article describes the current stance of these institutions as “limbo”. Actions that were made by these financial giants on Wall Street who were willing to explore the business potentials of the crypto frenzy, Bitcoin especially, are now static for most while only a few are still developing trading infrastructures.

These Wall Street market makers’ interest in Bitcoin was seen as a sign that heralded mainstream crypto adoption at least for traditional and sophisticated investors. However, CEO of New York-based SolidX Partners Daniel H Gallancy has said that “the market had unrealistic expectations that Goldman or any of its peers could suddenly start a Bitcoin trading business”, adding that it “was top-of-the-market-hype thinking”.

According to the article, people close to the crypto developments within Goldman Sachs reportedly stated that “progress has been so slow as to be barely noticeable”, though a full year has gone by since all the hype reached its full peak. The source further reports that many in the industry now think it was “quixotic to have expected last year’s frenzy to translate into a Wall Street crypto offering”.

Although Goldman seemed to draw more attention as it was among the first to clear Bitcoin futures and its aligned sentiments with the prospects of cryptocurrency has been well known in the industry, still, the long-awaited developments are yet to bear fruit as some would expect.

The bank has yet to offer trading of crypto services and has gained little traction for its NDF product, having signed up just 20 clients, despite efforts towards investing in custodian BitGo Holdings In. that was supposed to be its custody service arm.

Justin Schmidt, an executive with the firm blamed the current stalemate on regulators position on crypto assets.
Other financial groups that were discussed included Morgan Stanley, which seemly had a good thing going when they hired alleged crypto expert Andrew Peel. They later announced in September that they were ready to offer swaps tracking Bitcoin futures but have since then not traded a single contract, according to a person familiar with the matter, reports Bloomberg.

Citigroup and Barclays have been drawn into similar conclusions of silence, with two employees of Barclays, Chris Tyrer and Matthieu Jobbe Duval, who headed the digital asset project leaving the project. Barclays currently has no plans for a crypto trading desk, and Citigroup Inc has not traded any of the products it designed for cryptocurrencies within existing regulatory structures, the source said.

However, sentiments about the move of institutional investments into crypto in 2019 are still strong and most are simply waiting for regulatory clarity before joining the wagon. Meanwhile, “proper foundations” as a result of the bear market trends are considered to be an appropriate response from many institutions in order to avoid building “infrastructure without adequate testing for fear of missing out on a gold rush” suggests Eugene Ng, a former Deutsche Bank AG trader in Singapore.

 

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Wall Street in Wait ‘n See Mode After Rocky 2018

2018 was the year of Wall Street’s suggestion that certain big names might be moving into cryptocurrency in one shape or form, but sentiments have cooled somewhat leading into 2019.

Goldman Sachs was one of these voices this year, with one exec saying he would “happily put his mother’s money into Bitcoin” However its much-publicized plans to open a crypto trading desk have been called “top-of-the-market-hype thinking” by Daniel H. Gallancy, chief executive officer of New York-based SolidX Partners, suggesting that the market’s expectation that Sachs and Co might trade was unrealistic.

Justin Schmidt, head of Goldman Sachs digital business suggested that the cooling off of some of the year’s over speculation was actually a good thing for the crypto ecosystem, as it allowed for companies that are actually providing institutional-grade products and services to come on board at the right time:

“Custody is part of an overall integrated system where different parts need to work well with each other and safely with each other and you have to be able to trust all the different parts in that chain, from buying something to transferring it to storing it in for the long-term.”

Wall Street has also been cooled somewhat by the usual less than realistic predictions which seem to de rigueur when talking about cryptocurrency, all of which have been well off the mark. Recent soundbites have made huge revisions to sky-high predictions of earlier in the year. Mike Novogratz, one of those earlier voices, has recently suggested that a much toned down $20,000 is a far more likely benchmark for Bitcoin in 2019, a figure which Sonny Singh, CCO of Bitcoin payment service provider Bitpay, agrees with.

Morgan Stanley, with its new head of digital assets Andrew Peel hasn’t actually traded a single contract this year despite it being technically prepared to offer swaps tracking Bitcoin futures one month after they began trading on Chicago-based exchanges CBOE and CME.

2019 looks to Nasdaq as the next entrée to a big players crypto feast.  Nasdaq is already supporting cryptocurrency exchanges and the company is certainly not new to cryptocurrency’s underlying technology, blockchain. Apart from its long-term relationship with blockchain startup, Chain, it has recently announced a collaboration with cryptocurrency exchange Gemini.

Joseph Weinburg, OECD Think Tank Special Advisor, and Shyft Chairman suggested that Nasdaq should definitely trade in Cryptocurrency:

“… this could be a great thing! Regulation, again, is a massive roadblock to something like this happening. You need to solve and create an informed model on self-regulation. By that, I mean how do you operate a bitcoin “marketplace” while at the same time enable a security token exchange… It’s not an easy process, but the entity that cracks it unlocks the holy grail in completing the bridge between traditional and the crypto ecosystem.”

Wall Street is not waiting with bated breath before it springs into crypto action; It is interested, but is certainly on hold until Bitcoin’s fortunes begin to stabilize in 2019.

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BitFury Completes Coup with Appointment of Former SEC Commissioner in Director Role

Leading full-service blockchain technology company Bitfury has announced the addition of two key members to its Board of Directors. With the addition of co-founder of Korelya Capital, Antoine Dresch, and Annette Nazareth, a former staff of the US Securities and Exchange Commission (SEC) to the company, Bitfury is gaining essential experience in the right areas.

In the current climate, the latter’s appointment must be seen as a significant bonus on its own. Nazareth is an American attorney who served as a Commissioner of the SEC from 4 August 2005 to 31 January 2008.

Nazareth has also been Senior Counsel to former SEC Chairman Arthur Levitt and served briefly as the Interim Director of the Division of Investment Management. She then served as SEC Director of the Division of Market Regulation from March 1999 to August 2005. As Director, she had primary responsibility for the supervision and regulation of the US securities markets.

With this track record, she brings a valuable insight into the workings of current financial markets, also giving Bitfury an essential regulatory barometer with her comprehensive knowledge on the inside workings of the SEC.

Dresch joins Valery Vavilov, George Kikvadze, Bob Dykes, and Bill Tai as a voting board member at the company. With over 20 years in investment banking and positions at Goldman Sachs, UBS, and Morgan Stanley and as founder of DDMA advising media and internet investors in Europe, his profile adds further credentials to Bitfury moving forward.

“Antoine’s years of experience in investment banking and mergers and acquisitions will be valuable assets as Bitfury continues to grow. Annette will serve in a different capacity; as a trusted advisor, she will help guide and support Bitfury by offering her comprehensive knowledge of financial markets and regulation.”

 

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“Institutional Investment Class” Morgan Stanley’s New Catchall for Crypto

A new report published by American multinational investment bank Morgan Stanley has redefined cryptocurrency as an “institutional investment class”.

The report was initiated after research revealed that current trading trends are flowing towards institutional investors who are increasingly wanting to invest in cryptocurrencies, so much so that Morgan Stanley have had its eyes firmly set on institutional investor potential for some months.

This led to rumors recently that the bank was intending following in the footsteps of some other Wall Street financial institutions offering crypto-related services by dealing in contracts that gave investors “synthetic exposure to the performance of Bitcoin”.

Still unconfirmed but if the rumors turn out to have substance, then 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, according to a source close to the investment bank.

It is of little surprise then, that the New York financial giant has chosen this time to re-examine the way it looks at cryptocurrency. The new report, titled ‘Bitcoin Decrypted: A Brief Teach-In and Implications’, updated the classification of digital assets based on statistics from the last six months.

The report also examines problems reported by customers in relation to crypto as an investment class, such as regulatory uncertainty and a lack of regulations. These are areas that Morgan Stanley would like to address if it is seriously deciding on targeting institutional cryptocurrency investors, with a view to offering clients the chance to trade in Bitcoin derivative, as it has hinted in the past.

On a positive note for the bank, if this is to be their direction moving forward, is the reports mention of Fidelity’s new crypto services division, Coinbase’s fundraising round and positive regulatory developments. The report also notes that institutional investor confidence is rising at the expense of retail investment which has all but come to a standstill. The report states that institutional investors have gained “full confidence” in the market over the past six months.

 

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Crypto Pioneers Attack SEC over Regulation in Joint Letter

A group of crypto pioneers has laid out concerns about the regulation of cryptocurrencies to the US Securities and Exchanges Commission (SEC), outlining caution that further regulations passed could be detrimental to the industry as a whole.

The news of this letter to the SEC follows another written last week by the US Congress in which they asked for more clarity on cryptocurrency security. Congress also said that they believed that cryptocurrency important for many sectors of the US economy and that the SEC’s view that all cryptos are securities, besides Bitcoin and Ethereum, is leading to an exodus of crypto and blockchain companies and talent from the United States.

This latest letter from the industry itself against intrusive regulation is sure to put added pressure on the SEC to find a solution which is suitable to all. A major warning to the SEC was about the very nature of cryptocurrency which is that it was designed to be held by a third party, rather the individual, and any future regulation would need to keep this in mind.

The letter was a crypto who’s who cosignatory document including dotcom veteran Christopher Allen, Bitcoin core developer Bryan Bishop, financial expert Angus Champion de Crespigny, blockchain attorney Gavin Fearey and Caitlin Long, most recently Morgan Stanley’s managing director.

The letter explained that cryptocurrencies shouldn’t be type-cast due to their unique qualities and as such warned that “fitting them into existing market infrastructure introduces risks to investors that would not otherwise exist”.T he letter also warned against “applying rules to digital assets in ways which do not reflect their strengths”.

Earlier in June, SEC Chairman Jay Clayton clarified that the regulators had no intention of changing their traditional regulatory approach. He said:

“We are not going to do any violence to the traditional definition of a security that has worked for a long time. We’ve been doing this a long time. There’s no need to change the definition.”

Clayton was referencing a Supreme Court ruling from 1946 which defines a security as an investment of money in a common enterprise, in which the investor expects profits from others’ efforts. Those in the crypto industry have always maintained that cryptocurrencies, tokens, and ICOs, as assets rather than securities, need further legal definition.

 

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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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