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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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Bitcoin Influencers’ Payment Ideas Get Twitter Buzzing

Bitcoin influencers Jimmy Song and Tony Vays opened up a can of worms recently when chatting on Twitter about Bitcoin payment methods, provoking an all-in scenario for followers.

Jimmy Song, an instructor at Programming Blockchain LLC and Bitcoin educator/developer was sharing his opinion about using Bitcoin as a payment method with Bitcoin and Blockchain Researcher Tone Vays, on Twitter. The argument was posed by Song that one could spend money using a credit card whilst staying in credit and then pay the monthly bill with Bitcoin. His tweet suggested:

“If you want to use Bitcoin as a method of payment, this strategy is more rational and convenient than doing lots of on-chain tx’s:

  1. Spend with your credit card with no debt on it.
  2. When your credit card bill comes, sell just enough bitcoin to pay the bill.”

This provoked the response by Jackson Palmer, Founder of Dogecoin, who joined the thread to tweet that there was a missing third step to the Song scenario to avoid incurring credit card debt. He suggested that one could calculate the capital gain/loss tax on the sale of Bitcoin to USD to pay off the credit card.

Bitcoin Cash follower, Elliot, suggested, “That’s right folks. BTC supporters tell you to sell your Bitcoin back to fiat. BCH supporters say you must use bitcoin as CASH. It is peer to peer electronic cash. 1 bit @tipprbot” to which blockchain enthusiast Jan Klosowski responded.

“People will use Bitcoin because it’s profitable. Not for ideological reasons.”

Tone Vays worked on Wall Street for almost 10 years starting as a Risk Analyst at Bear Stearns and later becoming a VP at JP Morgan Chase in the aftermath of the 2008 financial crisis. His feeling was that Song’s idea was feasible from a consumer standpoint and suggested that in 2014 he had spoken about how misusing Bitcoin could affect the entire ecosystem quite negatively.

When asked why Vays, a prolific trader as well as an educator, diversified his trading to incorporate traditional markets, he responded:

“Because all of my videos are on my love of Bitcoin, my explanations of blockchain, and covering blockchain news. I do all of this because you can’t monetize that content. So, coming to conferences and speaking is so that I can spread the knowledge of Bitcoin, but I make money from what I do best, which is trading.”

He suggested that traditional markets offered a better return on his investments.

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Nasdaq to Trial Prediction Tool for 500 Cryptocurrencies

Nasdaq, second-largest exchange in the world by market capitalization, is planning to add a tool to the exchange which will aid investors to predict crypto price movement, according to unconfirmed reports.

A person familiar with the company’s plans has indicated that it will shortly be adding crypto assets to its new Analysist Hub. The Hub, launched in 2017, computes traditional asset market fluctuations drawing on social media and other sources.

Wall Street has shown interest in the cryptosphere over past months, with major banks making statements of intent, although Brian Kelly’s prediction that the addition of the New York Stock Exchange (NYSE) and Goldman Sachs to the crypto status quo would cause the market to surge, has yet to happen.

Bill Dague, Nasdaq’s head of alternative data, is guarded in his response to the suggestion that the exchange giant is about to take the same steps as some of Wall’s Streets other major financial institutions, and commented, “…given the abundance of interest, we are exploring cryptocurrency related datasets… Whether or not we launch a crypto-related product remains to be seen.”

On the other hand, Nasdaq’s source had a less guarded response, suggesting that the service would provide information on the movement of 500 crypto datasets using resources such as Twitter, and possibly StockTwits and Reddit.

Nasdaq CEO Adena Friedman had hinted earlier this year that Nasdaq had been looking into crypto-related products when she remarked:

“Certainly, Nasdaq would consider becoming a crypto exchange over time… I believe that digital currencies will continue to persist it’s just a matter of how long it will take for that space to mature.”

An article published in May on the Nasdaq website even cited three coins that the exchange felt might be able to withstand future market turmoil if it transpired: Bitcoin (BTC), Litecoin (LTC) and Stellar (XLM).

Nasdaq will need to move fast with its any crypto additions to its Analyst Hub, as news services Reuters and Bloomberg are already lining up with similar plans to launch a crypto analytic tool.

 

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Prominent CEOs Upbeat on Bitcoin with 10K November Prediction

Some prominent CEOs have been speaking out on where they see the cryptocurrency market heading as it moves beyond 2018 into the future and the synopsis is upbeat.

With co-founder of BTCC Bobby Lee predicting that when Bitcoin passes the USD 60,000 price level in the coming years, it’ll reach a total circulation value of USD 1 trillion, what then is the short-term synopsis for the digital currency?

With 3,650 Bitcoin ATMs in the world and approximately four new Bitcoin ATMs being installed each day, some in the most unexpected of places, the market for Bitcoin certainly isn’t going away anytime soon, and popularity on the street is clearly on the up, with experts expecting the ATM market will achieve a USD 145 million value by 2023.

Herman Finnbjornsson, founder of Svandis, is certain that Bitcoin is going nowhere if not onwards to success, suggesting that “[There’s] Less than a 1% chance in my mind that Bitcoin won’t succeed. I think that there are a lot of reasons to be bullish on Bitcoin. Banks are getting into Bitcoin.”

Banks around the world are becoming involved in Bitcoin with particular interest on Wall Street as ETFs are expected to gain approval by the SEC next year, along with industry expectations these will lift the market and attract institutional investors.

Russell Korus, the CEO of EZ Exchange, sees Bitcoin succeeding for a number of reasons, suggesting that its failproof, decentralized, and autonomous qualities simply can’t be overlooked. He suggests that Bitcoin will lead what he calls “a brand new paradigm” where value can be exchanged without the need for an intermediary creating “far-reaching and society-shifting repercussions”, within the industry as the move towards decentralization now, eventually becomes the norm.

Finnbjornsson sees this year as the springboard to his success scenario suggesting that Bitcoin could easily pass the USD 10,000 price level by the first week of November. Brian Kelly’s biggest news of the year, the much talked about platform backed by Microsoft and Starbucks, will see Bitcoins sales volume support that figure as investors rush to get in early.

 

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Bitcoin Advocate and Academic Gives ETFs the Thumbs Down

As previously reported by Bitcoin News, the US Securities and Exchange Commission (SEC) has just rejected at least eight proposals for Bitcoin Exchange-Traded Funds (ETFs), but there is one investor who doesn’t see this as a bad thing.

In a recently released video, Bitcoin advocate and tech entrepreneur Andreas Antonopoulos sees Bitcoin ETFs as both an inevitable and potentially destabilizing influence on the cryptocurrency market when they finally get approval.

Andreas M. Antonopoulos is a Greek-British bitcoin advocate. He is a host on the Let’s Talk Bitcoin podcast and a teaching fellow for the M.Sc. Digital Currencies at the University of Nicosia. His concerns are best illustrated by this comment made on the video.

“ETFs fundamentally violate the underlying principle of peer-to-peer money, where each user is not operating through a custodian, but has direct control of their money because they have direct control of their keys.”

Antonopoulos seemingly examines ETFs differently from the majority of market investors who see approval as a kickstart to a sluggish year which will bring in institutional investors and revitalise Bitcoin.  His view is that the market will be manipulated by major market makers as seen in commodity markets, and the investors will lose the right to be heard, arguing:

“We already saw that level of influence during the August 1st fork, user activated software forks, Bitcoin Cash, the scaling debate… Large custodial exchanges had a very strong voice in the ecosystem. They were able to decide if they were going to support or not on behalf of 10 million customers… an ETF will do that and it will do that on an even bigger scale”

Another issue that concerns Antonopoulos is privacy and transparency, suggesting that an ETF may react to regulatory pressure and refuse to adopt privacy measures and create another corporate Bitcoin market. This is a similar view to that held by former Wall Street exec Caitlin Long, who sees a corporate Bitcoin through Wall Street’s entrance into the crypto arena bringing the potential of bad practice to the industry.

Recently, Ethereum co-founder Vitalik Buterin Tweeted out his critique of those focusing too much on ETF approval, pointing out the accessibility of purchasing cryptocurrency should be focused on to promote ”actual adoption.”

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Could Wall Street Banks Become Crypto Custody Specialists?

Wall Street banks are slowly beginning to consider crypto custody as another mainstream service.

This, despite the occasional dig at crypto from the big players on Wall Street such as Goldman Sachs recent “cryptocurrency mania” comment last week citing it as one of the top risks for the market, even though the very same bank is dipping into Bitcoin derivatives on behalf of its fund manager clients.

The above service offered by Goldman Sachs may well be client-driven but behind the usual anti-crypto spin, a different picture can be detected after a bit of surface scratching. The Financial Times suggests that “trendy young crypto-types” are the new kids on the Wall Street financial block, although what crypto-related products will come from these young brains is still to be revealed. However, the trend is very much toward research and crypto is the name on the tip of everyone’s tongues.

Analysts are suggesting that the new frontier on Wall Street could well be cryptocurrency assets custody; looking after customer’s cryptocurrency funds. At the back of this are fees, another way the bank can make money out of cryptocurrency without dabbling themselves. In this way, billions of dollars held in custody by the banks can be another payday for the big names on Wall Street.

Recent Bitcoin News reports have illustrated some of the problems of safe storage of cryptocurrency assets, which vary in degrees of complexity from multiple vaults with random back up keys to Swiss Bunkers carved into the sides of mountains. Thus, there is clearly scope for bank intervention on behalf of clients.

Reportedly, forerunners in this new race are New York City-based ItBit, Gemini and more lately Goldman Sachs and JPMorgan now lining up to offer their services. Others are Japanese broker Nomara and notably the Swiss Stock Exchange part-owned by the 130-bank SIX group conglomerate.

Sam Mcingvale, San Francisco-based head of Coinbase Custody suggest that his company is joining the custody fray with plans to cold-store USD 5 billion of institutional crypto assets by the end 2018. Customers need these services, he argues:

“People were saying: “Hey, we’re already holding Bitcoin with you, we trust you, but we need more; we need a regulatory component, we need monthly statements, we need a different type of insurance.”

 

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tZero to Receive Largest Recorded Investment for Blockchain Startup

Chinese private equity firm GSR Capital has confirmed it signed a letter of intent to invest USD 270 million in blockchain startup up tZero, making it the largest recorded investment to such a company, according to Forbes.

Atypical investment structure

The USD 270 million investment came with an 18% stake in tZero, a platform for trading blockchain-issued securities, with GSR confirming it will spend another USD 104.55 million for approximately 10% of the platform’s parent company Overstock’s shares. Additionally, the private equity firm has pledged another USD 30 million in tZero’s initial coin offering (ICO).

This funding would bring the aggregate investment past USD 404 million, pushing tZero’s company valuation to USD 1.5 billion, surpassing its parent Overstock.com (USD 1.07 billion) despite the flagship product not even having been launched yet.

Independent letters of intent were configured and signed by all parties to secure the deal.

Sonny Wu, GSR Capital’s chairman and founder, told Forbes that his company has a long-term view on scaling the platform globally. This investment is GSR Capital’s first public blockchain venture, with its previous history focused on electric vehicles and clean energy.

tZero executive chairman and CEO of Overstock.com, Patrick Byrne, said that the money would be used to open more tokenized securities exchanges internationally for uses such as his SEC-licensed US platform. He envisions tZero’s token to be listed on each of these exchanges.

Byrne noted that raising capital from the businesses home in the US was proving challenging, hence they had to look further abroad. He told Forbes, “US capital is, to be honest, they’re gun shy on this whole blockchain issue… I’m sorry to say the US is not the leading country in the world.”

Hitting into US economics harder, Byrne said that he started the venture to undo what he called the ”original sin” of Wall Street – separating the trade of a stock and its settlement. tZero’s tokenized securities are designed to enable real-time, transparent lending of securities.

Such sentiments have led Byrne to be called the ”scourge of Wall Street” by those whose practices he criticizes, but this does not trouble him. Instead, he believes that the significant investments to tZero show that the tides are turning on traditional Wall Street practices.

 

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Goldman Sachs Crypto Custodial Services May Be Just Around the Corner

Reports have suggested that Goldman Sachs is considering offering crypto custodial services for clients.

Rumors abound surrounding some of the larger Wall Street banks and their various flirtations with cryptocurrencies making it difficult to tie down what is actually in the pipeline. The latest unconfirmed story is that Goldman Sachs is venturing into crypto custody for its client’s benefit.

If this the case, it probably shouldn’t be totally unexpected, given recent activities at the bank after the recent change in leadership in Lloyd Blankfein’s replacement, David Solomon.

Solomon has been with Goldman Sachs since 2006, working his way from the joint head of the investment banking division, to the chief operations officer in 2016. Last month, he shared the news that the New York-based investment bank was expanding its cryptocurrency services offered to clients. He has publicly discussed the financial benefits of cryptocurrency trading,

The man who produces and DJs electronic dance music under the stage name DJ D-Sol has clearly already made an impression, although crypto seems to be an undercurrent flowing through the bank waiting for the right moment to emerge. Christopher Matta, co-founder of Crescent Crypto Asset Management and a former VP at Sachs, once famously said that he would invest his mother’s money into Bitcoin.

Reportedly, the plan is to take the next step after announcing Bitcoin futures to fulfill Solomon’s target for Sachs to “evolve its business and adapt to the environment” by offering a much-needed service for its clients. The new requirement for bank clients with cryptocurrency assets is to have somewhere safe to store their currency.

Although the bank hasn’t announced any action following hints that it was setting up a Bitcoin trading desk, this would be a step down that road. This would inject further confidence into a rather deflated crypto environment at present with the news that a big name such as Goldman Sachs had become a custodial bank for crypto assets. The bank’s response to the rumors was:

“In response to client interest in various digital products we are exploring how best to serve them in this space. At this point, we have not reached a conclusion on the scope of our digital asset offering.”

 

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Starbucks Pro-Bitcoin but You Can’t Spend It in Stores Yet

Misleading reports following the Starbucks working partnership with the Bakkt ecosystem stated that Starbucks would be accepting Bitcoin in stores.

While this is not on its agenda quite yet, the multinational corporation has expressed its support for helping customers exchange their cryptocurrencies for fiat to spend in its over 27,000 cafes.

Partnership with Bakkt

Starbucks is the flagship retailer of Bakkt and has been given the role of developing trusted and regulated working relationships with clients who wish to exchange their Bitcoin to spend in retail stores.

Misleading headlines from outlets such as CNBC that ran with ‘New Starbucks partnership with Microsoft allows customers to pay for Frappuccinos with Bitcoin‘ appear to misunderstand the dynamic of the scheme and assume Bitcoin could directly be used to purchase goods.

A spokesperson for Starbucks spoke to Motherboard to clarify the logistics of its partnership, reaffirming that the exchange is merely a platform to change cryptocurrencies into US dollars that the cafe chain and other outlets can accept. Starbucks did not rule out the possibility of accepting Bitcoin in the future, however, saying it would continue to consider customers wants alongside the changing regulatory space.

Maria Smith, vice president of partnerships and payments for Starbucks, described the corporation’s role as ”pivotal” in the early stages of Bakkt.

Bringing it mainstream

The Bakkt venture is a Wall Street-regulated platform aiming to bring Bitcoin to a mainstream audience, with its founding members including Microsoft and the Intercontinental Exchange (ICE). Bakkt CEO Kelly Loeffler described its purpose as helping ”unlock the transformative potential of digital assets” on an international scale.

A press release from Starbucks Friday notes that the federally-regulated marketplace will, for now, facilitate trades just for Bitcoin to fiat as it is currently the most liquid digital currency.

 

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Wall Street Crypto Interest Continues as Fundstrat Accepts Bitcoin

Leading independent Wall Street research organization Fundstrat has announced that it is about to start accepting Bitcoin from global clients.

The trend in Wall Street currently seems split between joiners and leavers, those such as banking giant Goldman Sachs who, having listened to its client base, has demonstrated that it has seen the writing on the wall regarding cryptocurrency, and those leaving comfortable positions in banking to jump on the blockchain bandwagon wholeheartedly.

Those such as JP Morgan blockchain executives Amber Baldet who left to found her own decentralized app store and ex-vice president of Goldman Sachs who jumped ship to fire up a crypto asset management firm, both examples of the current lure of crypto and blockchain on Wall Street.

Fundstrat Global Advisers have decided to become joiners in its announcement that the firm will start accepting Bitcoin payments through Bitpay, the largest global blockchain payments provider. Reportedly, the organization is one of the few macro research firms to follow movements in the crypto environments and has decided to take the plunge. Managing Partner Thomas Lee commented on the move:

“Fundstrat found that accepting payments via BitPay is considerably simpler, faster and less expensive than bank wires… Bitcoin payments make it easier for our clients, particularly those outside the US, by offering more options to pay for our research services without having to deal with the hassles of currency translation.”

Its clients include institutional investors, wealth advisers, pension funds, and wealthy individuals requesting investment reports and profiles including cryptocurrency.

And it is not just Bitcoin that Wall Street is currently taking an increased interest in. Last month’s comments by SEC Director of Corporate Finance William Hinman that Ether wasn’t operating as a security has left its impact on New York’s financial hub, with CBoE’s president Chris Concannon declaring:

“We are pleased with the SEC’s decision to provide clarity with respect to current Ether transactions… This announcement clears a key stumbling block for Ether futures, the case for which we’ve been considering since we launched the first Bitcoin futures in December 2017.”

 

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