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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