Morgan Stanley, a US investment bank handling over 482 billion USD in assets are planning to get into Bitcoin (BTC) derivatives, a source told Bloomberg. The plan is to offer institutional investors the ability to long or short Bitcoin’s performance without having to handle any cryptocurrencies themselves.
Morgan Stanley’s BTC Push
It is a turbulent time for mainstream investors looking to get into cryptocurrencies. The SEC recently denied yet another Bitcoin Exchange Traded Fund (ETF), and earlier this week suspended trade of two Swedish cryptocurrency derivatives. At the same time many more large institutions are clamoring to be among the first to offer traders some form of trusted, regulated access to trading in crypto.
Citigroup is exploring Digital Asset Receipts, a variant on American Depository Receipts, which have been used for decades to allow American investors to trade in foreign stocks not directly listed on American exchanges. Digital Assets Receipts will work by a third party custodian holding large amounts of cryptocurrencies on Citigroup’s behalf, with Citigroup then selling indirect ownership of the stored coins – except buyers cannot withdraw.
At the same time, Goldman Sachs is exploring ‘non-deliverable forwards’; allowing customers to bet for or against Bitcoin without ever owning the rights to any coins.
Bitcoin Swap Trading
And now Morgan Stanley want in on the game. The investment bank giant with $38 billion in annual revenue and $482 billion in controlled assets is gearing up to offer a service known as Bitcoin Swap Trading. This will offer customers ‘synthetic exposure’ to Bitcoin’s price performance, according to Bloomberg’s source. Customers will never hold any crypto themselves, or even the rights to them. Instead, they will essentially be betting on the digital currency going up or down in value.
Morgan Stanley is, according to the source, already technically ready to begin offering Swaps, and are only waiting for the completion of an internal approval process and for customers to line up.
Other than the source, representatives of Morgan Stanley declined to answer any of Bloomberg reporters’ questions.
2018 has been a cruel market for new investors in cryptocurrencies, with most coins losing the vast majority of their price from the start of the year; Bitcoin is two thirds down, and many altcoins have bled more than 90%. But even as prices fall, driving traders to frustration, financial giants from around the world are quietly positioning themselves in preparation for better times ahead.