Business 14 September 2018

Dan Taylor

Morgan Stanley planning crypto trading launch: report

Major global investment bank Morgan Stanley is planning to launch trading in crypto swaps for its clients, according to reports.

First reported in Bloomberg, the news comes from people familiar with the matter, and suggests Morgan Stanley could be about to follow similar moves from other Wall Street firms in exploring options for institutional investors to speculate on cryptocurrencies like BTC.

According to the reports, Morgan Stanley is set to “deal in contracts that give investors synthetic exposure to the performance of [BTC],” rather than trading in crypto directly. The source is quoted as describing how the price return swaps would work, allowing investors to position on both the long and short side of the market with Morgan Stanley charging a spread on each transaction handled.

“Investors will be able to go long or short using the so-called price return swaps, and Morgan Stanley will charge a spread for each transaction,” the report stated.

While Morgan Stanley has not officially confirmed the reports, if true, they would mark only the latest step from a major Wall Street player towards embracing trading in cryptocurrencies.

Despite vocal opposition to the fundamentals of BTC, Goldman Sachs was this week forced to deny claims it had shelved its plans for a cryptocurrency trading desk. It follows similar indications from Citigroup insiders that they too are planning to offer investors access to cryptocurrency products.

As with Morgan Stanley and Goldman Sachs, the Citigroup plans would allow investors to speculate on cryptocurrency markets without holding cryptocurrency directly, known as non-custodial trading.

This is seen as an important step to attracting institutional investors, especially while cryptocurrency markets remain largely unregulated. Rather than holding cryptocurrency directly, these alternative investments allow exposure to crypto markets for regulated investors. It comes at a time of increasing openness from Wall Street and mainstream finance towards the cryptocurrency sector.

If the Morgan Stanley plans are confirmed, and the other major banks follow suit, there could soon be a series of alternative investment opportunities for institutional investors looking to take exposure to positions in the crypto markets.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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