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Cryptocurrency is still a drop in the ocean in volume compared to other sectors, but it’s growing quickly, and the technology that cryptocurrency sits on has the ability to solve a myriad of problems across multiple sectors globally.

While still prevalent, the mantra “Blockchain not Bitcoin” is quieting. This was evidenced during Blockchain Week in New York in 2018 where there was a full representation of enterprise blockchain, crypto sectors of the industry and traditional finance. At 8000, the number of attendees who showed up for CoinDesk’s 4th annual conference, Consensus 2018 was double that of last year.

The conversations of even the most outspoken critics are turning more positive. J.P. Morgan Chase Chairman and CEO Jamie Dimon backpedaled in early 2018 on his earlier criticisms of Bitcoin. You can’t continuously applaud the underlying technology of Bitcoin without it lending credibility to Bitcoin itself.

Goldman Sachs made a public turnaround from their earlier criticism and announced they didn’t believe that Bitcoin was “a fraud” as they plan to start trading Bitcoin for their clients indirectly via the US futures markets.

It was widely reported that an executive concerned with creating the offerings, Rana Yared, said the bank had been “inundated” with client requests.

“It resonates with us when a client says, ‘I want to hold Bitcoin or Bitcoin futures because I think it is an alternate store of value,’”

“...It is not a new risk that we don’t understand. It is just a heightened risk that we need to be extra aware of here.” [1]

The investment bank also intends to create its own Bitcoin futures product. For some, this news is being interpreted as a signal that major institutional money is increasingly flowing into Bitcoin. [2]

Barclays is looking at “how to engage” in the market for digital currencies, Chief Executive Officer Jes Staley told investors. [3]

There are reports, from an unnamed source, that Morgan Stanley is focusing virtually all of its attention on cryptocurrency trading as of right now. The source from inside Morgan Stanley allegedly said:

“Several of us have been reaching out to what we would call ‘mid-tier’ money managers that we know are on the cusp of opening crypto focused hedge funds. We have done some work with pure-play crypto funds as well, but we’ve been more specifically tasked to engage with firms that are apt to add to their current portfolios as opposed to starting from scratch.” [4]

Japanese bank, SBI, revealed that it intends to launch a crypto exchange in mid-to-late 2018. Named “SBI Virtual Currencies,” it will be the first crypto exchange in the world to be entirely owned by a bank.

With futures trading now well established and blockchain experts being hired left, right, and centre, with the CEO of Nasdaq telling reporters she would be open to transitioning into a cryptocurrency exchange as the market matures, there is a definite change in attitude and involvement from the more traditional financial sector. Some believe the race is on now for major banks to start offering clients the chance to directly trade cryptocurrency. [5] and [6]

New opportunities

It’s not just the major financial institutions who are coming to the market place, there are a number of prominent individuals who are migrating from big banks to start up their own ventures within the cryptocurrency space, where they can become more nimble and relevant in the market.

It’s too easy to dismiss those involved in cryptocurrency as the cowboys in this often termed ‘wild west’, the truth is there are an increasing number of senior individuals who have historically been involved in the more traditional financial sector who are flocking into the cryptocurrency space.

A few such examples include:

Olga Feldmeier, CEO of blockchain startup, Smart Valor an alumnus of the UBS banking group is focused on enabling ‘high net worth’ individuals to purchase assets using blockchain- administered tokens that can subsequently be bought or sold in a secondary marketplace. [7]

Caitlin Long had 22 years of corporate finance experience, with Morgan Stanley, Credit Suisse, Salomon Brother. She was also the Managing Director who served on Morgan Stanley’s internal blockchain working group before becoming Chairman & president of enterprise blockchain company, Symbiont in 2016.

Hu Liang created the Emerging Technologies Center (ETC) as State Street's corporate unit to focus on emerging and disruptive technologies that could have a long term impact on the bank and industry before launching his own crypto start up after a number of huge institutional clients kept asking questions about blockchain and cryptocurrencies.

Amber Baldet, J.P. Morgan's former head of blockchain launched a new blockchain start-up called Clovyr. "It's a way to help people think differently about decentralised application design," Baldet says. [8]

Former Goldman Sachs banker and newly appointed Vice President, Chris Matta along with two former colleagues, Ali Hassan, and Michael Kazlev, created their own cryptocurrency focused investment vehicle called Crescent Crypto Asset Management. [9]

Investment manager Brian Kelly is launching a new blockchain startup-based exchange-traded-fund (ETF). [10]

This is just the tip of the iceberg for those who believe that cryptocurrency and blockchain is the future, and it’s not just former bankers. Former members of Deloitte's blockchain team are joining a new startup that seeks to bring a tokenised blockchain protocol to one of the world's most inefficient markets, the supply chain. This type of complete transition fully into the crypto world is happening everywhere. [11]

These pioneers are leaving behind six figure salaries and they’ve opted for this migration more often as a result of research they’ve been doing on behalf of their former bank. They see where the technology will revolutionise the world and are making sure they’re shaping it.

This is a significant point to note, for any firm choosing to include Bitcoin and other cryptocurrency offerings, you will need a champion of cryptocurrency at a senior level, indeed C Suite level, to be bought in to the idea. Especially if your firm is a long established traditional finance firm like a Private Bank, Family Office or Wealth Manager. There will be a cultural shift in thinking required across many stakeholders to successfully embrace this commercial decision.

Have you surveyed your existing clients to see what their Bitcoin/Cryptocurrency appetite is yet?

Sources:

[1] https://www.zerohedge.com/comment/11611572
[2] https://www.coindesk.com/goldman-sachs-to-begin-bitcoin-futures-trading-within-weeks/
[3] https://www.bloomberg.com/news/articles/2018-05-01/plus500-s-sales-more-than-triple-on-crypto-derivatives-demand
[4] https://cointelegraph-com.cdn.ampproject.org/c/s/cointelegraph.com/news/financial-institutions-in-a-race-who-will-bring-crypto-trading-to-the-fiat-masses-first/amp
[5] https://www.cnbc.com/2018/04/25/nasdaq-is-open-to-becoming-cryptocurrency-exchange-ceo-says.html
[6] https://cointelegraph.com/news/financial-institutions-in-a-race-who-will-bring-crypto-trading-to-the-fiat-masses-first
[7] https://www.forbes.com/sites/trevorclawson/2017/12/18/want-to-launch-a-disruptive-blockchain-startup-first-find-a-sympathetic-regulator/#7fcd7fc77f50
[8] https://www.cnbc.com/2018/05/14/former-jpmorgan-head-of-blockchain-announces-new-start-up.html
[9] https://toshitimes.com/newly-appointed-goldman-sachs-vice-president-leaves-for-cryptocurrency/
[10] https://www.coindesk.com/wall-street-vet-brian-kelly-launches-blockchain-etf/
[11] https://www.coindesk.com/deloitte-veterans-launching-tokenized-blockchain-supply-chain/

Bridget Greenwood

Bridget Greenwood

Marketing and Content Partner

Starting as an Independent Financial Advisor, Bridget pivoted her career to emerge as a pioneer in financial services social media. A founding director of Financial Social Media UK, Bridget has attracted multiple industry awards. Aware that technology marches forward no matter your view point on how it might disrupt incumbents in your market place, especially in traditional industries, Bridget vehemently believes that staying in front of technology is essential to survival and success. How you can harness these changes, rather than deny, impede and ultimately be left behind, is the key for best serving your clients and customers.