Wall Street has been warming up to cryptocurrencies, partly because of the potential the industry offers and partly because other alternative channels such as Robinhood and Square have threatened to dominate the scene. The latest to make an entrance into the industry is Morgan Stanley, with a report emerging that indicated that the financial services giant plans to offer its clients Bitcoin trading. The New York-based bank will not offer direct trading like crypto exchanges do, instead offering derivatives tied to Bitcoin.

Wall Street Pushes On

Morgan Stanley, which is the sixth-largest bank in the U.S, will facilitate the trading of Bitcoin futures, revealed a source with knowledge on the matter. The source, who was quoted by Bloomberg, further revealed that the bank has been preparing itself for quite some time and that it is ready to kick off the trading. However, it’s awaiting the completion of an internal approval process as well as proven demand for the product from institutional clients.

Morgan Stanley has already prepared itself for crypto trading, having hired its head of digital asset markets, Andrew Peel four months ago. Peel joined the bank from Swiss investment bank, Credit Suisse AG and according to the source, he reports to Morgan Stanley’s global head of equities trading, Niall Dowling. The appointment of Peel as the head of the bank’s digital assets department only came to light in August after eFinancialCareers reported it. Peel had worked at Credit Suisse for 12 years as a derivatives trader.

The bank intends to structure its Bitcoin trading platform in a way that will “give investors synthetic exposure to the performance of Bitcoin,” the source revealed. The bank will also offer its clients the option to go long or short using price swaps, charging a spread for each transaction.

Morgan Stanley joins other Wall Street giants which are scrambling to position themselves strategically for the fast-rising crypto trading industry. Having initially been very apprehensive towards crypto, banks and other financial institutions are warming up to this new asset class as it becomes apparent that the interest of investors is rising. The interest by Wall Street has also been given a nudge by trading platforms such as Robinhood and Square which have overtaken the banks and gained many clients interested in trading cryptos. Robinhood has especially been an attractive platform especially for novice investors as it doesn’t charge its clients any trading fees.

Morgan Stanley has joined Citigroup and Goldman Sachs, both of whom have set up their crypto trading departments. Citigroup, which had earlier in the year disabled the ability to purchase crypto using their credit cards, has recently set up a new mechanism  known as digital asset receipts which will allow its clients to trade in cryptos without necessarily owning them. Goldman Sachs has set up a trading desk dedicated to cryptos as it seeks to compete with the other fast movers.

 


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