Morgan Stanley Plans Bitcoin-Based Trading

An unnamed source confirmed to Bloomberg this week that Morgan Stanley is following the example of other Wall Street players in developing Bitcoin-based products.

Though there are no plans for direct cryptocurrency trading, Morgan Stanley is developing complex derivatives based on Bitcoin futures. The planned bitcoin swaps or “price return swaps” will allow investors to go short term or long term on the products, with Morgan Stanley charging a spread on each transaction.

The source, who asked Bloomberg not to be identified, says that Morgan Stanley is ready to offer Bitcoin swap trading, subject to an internal approval process as well as the market demonstrating proven institutional client demand.

The move by Morgan Stanley, mirroring similar plans by Wall Street’s Goldman Sachs to develop derivatives, or non-deliverable forwards, could itself fuel institutional demand.

So far, Morgan Stanley has declined to officially confirm the plans. CEO James Gorman said earlier this year the bank would not offer direct cryptocurrency trading, but at the time confirmed outline plans for the digital asset derivatives desk.

Currently, the cryptocurrency markets are waiting for a much-needed boost, institutional interest like that of Morgan Stanley and Goldman Sachs could deliver that market confidence. Other reports indicate that New York Stock Exchange owners Citigroup are also planning a new vehicle for cryptocurrency investment called digital asset receipts (DARs).

Suggested Reading Learn more about Bitcoin in our beginner’s guide.

Indeed, the race might have begun between the trading giants to bring bitcoin-based products to a core institutional and professional investment base.

Last week “fake news” of Goldman Sachs’ withdrawal of its cryptocurrency desk plans caused a dip in Bitcoin prices before its Chief Financial Officer (CFO) Martin Chavez put concerns to rest in a speech at the TechCrunch Disrupt Conference. Chavez confirmed Goldman Sachs is going ahead with its non-deliverable forwards products, as well as its plans for cryptocurrency custody services.

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