Major Names Enter The Crypto Fray
Goldman Sachs, The New York Stock Exchange, and More Celebrity Investor Squabbling
As the many parties that color our economic systems continue to take rather polarizing stances on the long term viability of cryptocurrency — and to a lesser extend blockchain technology — the inescapable reality is that the once nascent darling child of economic anarchists is now wholly and truly on the world’s radar. This period will doubtless be given a snappy moniker and studied by future socialists and economists alike, as the rapidity and proliferation of this technology, and the profound speculation that goes along with the assets attributed to it, is truly unprecedented.
NYSE Gets In On The Action
ICE, the parent company of the New York Stock Exchange, is working on creating a platform that will facilitate Bitcoin trading, according to an expose by the New York Times. The new system would allow banks to purchase Swaps from the exchange, which in turn enables them to offer Bitcoin directly to customers. Swap contracts, which at a very high level allow for two parties to exchange almost anything (debt, commodities, currencies, etc) at an agreed upon value, would fall under the purview of the CFTC, which currently provides more clarity on Bitcoin related financial instruments, having overseen Bitcoin futures contracts traded by the CBOE and CME.
Goldman Breaks Their Crypto Silence
Goldman Sachs has finally addressed some long standing rumors about their opening of a cryptocurrency trading desk. Initially, the bank will trade Bitcoin futures contracts on behalf of clients, but going forward it appears plausible that they may partake in direct trading and holding of cryptocurrencies. Goldman’s involvement in the landscape is especially significant given their massive influence in the financial space and almost one Trillion in total assets. Goldman’s move sheds light on the growing chasm in opinion among the world’s top bank as to how to treat digital assets, with giants like JP Morgan and UBS admonishing the notion of directly offering cryptocurrency to customers, while making an effort to separate their perceived efficacy of blockchain technology. Indeed, JP Morgan, furthering their bizarre stance on the issue, recently filed for a patent on their blockchain powered P2P payment technology.
Prominent Naysayers Respond
The weight of Goldman’s reputation and their decision to enter the space also counteracts a slew of negative proclamations coming from some rather large names. Bill Gates reiterated his stance on Bitcoin, stating “As an asset class, you’re not producing anything and so you shouldn’t expect it to go up. It’s kind of a pure ‘greater fool theory’ type of investment” during a segment on CNBC. His statements come at a mildly ironic time given this week’s announcement from Microsoft that they’re releasing their Azure cloud computing platform, which will act as a blockchain app creation service. Famed investor Warren Buffett said this week the he feels cryptocurrencies will come to a “bad ending”, further clarifying that Bitcoin is “probably rat poison squared”, though Elon Musk rather vociferously diagrees . Vice Chairman of Berkshire Hathaway Charlie Munger went on to eloquently expound on the sentiment behind Bitcoin investing, stating “Someone else is trading turds and you decide I can’t be left out”.
New Regulations Continue
Financial regulators are further muddying the situation. The CFTCreemphasized the importance of working together with the SEC in creating regulations while the SEC continues to grapple with the classification of Ethereum, which would have dire repercussions of it were to be classified as a security. Ethereum Co-founder Joseph Lublin seems unconcerned in regards to the media (and ETH pricing) frenzy around the topic, stating that their team worked closely with legal experts before Ethereum launched and that given the open nature of the protocol and the relative disbursement of power, it would be highly untrue to attest that any centralized party controls the success of the platform — a central attribute of a commonly understood security offering.
European exchanges called for more regulatory clarity this week while the Japanese FSA again strengthened guidelines exchanges must adhere to, including bans on anonymous coins like Dash and Monero as well as required cold storage for cryptocurrency and separated management of customer funds. Even smaller markets have come out with new regulation. Azerbaijanhas clarified that income earned from crypto trading is taxable, with Thailandfollowing suit. South Korean lawmakers have introduced a bill to legalize ICO trading in a regulated and protected capacity.
There’s Always Crypto Kitties
While news of major banks getting formally involved in trading assets garners headlines, real world adoption is still paramount, if for nothing else than to lend at least a modicum of credence to intense investor speculation. A group of Major automakers have formed MOBI, an organization that sees various parties in the transportation landscape come together to use blockchain technology as a tool for the next generation of mobility. Nearly half of of the 26 public Banks in China deployed some kind of blockchain solution in 2017, Oracle plans to launch a slew of blockchain products, and Stephen Curry of the Golden State Warriors kicks things off with the first celebrity CryptoKitty.
