Wall Street Expected to Dominate Cryptocurrency Trading in Future

A New Era for Wall Street

Cryptocurrency continues to gain mainstream acceptance as many investors look to go digital. Interest among Wall Street power brokers appears to be gaining momentum after Goldman Sachs made known its intention to open a bitcoin trading section.

Similarly, the New York Stock Exchange’s parent company, Intercontinental Exchange (ICE), is thought to be working on a bitcoin trading platform of its own. The Wall Street Journal revealed that ICE had discussions with some financial companies regarding the project, which is still under development. While ICE is believed to be working on adopting cryptocurrency, there’s still no further information concerning the project yet.

Of these companies, Goldman Sachs seems to be the most serious about getting involved with cryptocurrency. The American multinational investment bank and financial services company is also considering offering a Bitcoin Futures.

If it ends up doing so, the New York-based organization will join the likes of the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE), which are already providing Bitcoin Futures contracts to their customers as one of the few firms to allow exposure to the price of cryptocurrencies without owning them.

It may seem too soon to talk about the Wall Street allowing investors to invest in cryptocurrency, but the move by the likes Goldman Sachs and Intercontinental Exchange represents a significant shift from a sector that was once very unwelcoming to digital currencies. Indeed, their involvement may yet prove to be a game changer.

Wall Street’s Anticipated Domestication

Newsbtc.com reports that UK’s Barclay’s Plc had revealed its plans to embrace cryptocurrency per clients’ demands. Several other firms within the financial services sector are also said to be pondering similar moves. The Newsbtc piece suggests that investment banks are open to the possibilities of trading cryptocurrency, provided it enables them to meet customers’ needs.

Beyond broking, custody, and everything in-between, Matt Levine, a former investment banker with Goldman Sachs maintains that banks must consider it a necessity to trade cryptocurrencies, so long as clients expect to be rendered such services.

The emergence of the Bitcoin futures contracts is believed to have made the market more accessible to money managers. Levine reckons banks may one day domesticate cryptocurrency if clients demand is high enough.

It may take some time before Wall Street finally dominates cryptocurrency trading. However, the perception shifts in the financial services industry suggest that day may not be very far away after all.

More so, the fact that Bitcoin Futures makes it possible for investors to speculate on the currency’s price without actually needing to own it could lead to more widespread adoption shortly.

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The Future of Wall Street is On Line

 

Investment bankers were the lords of Wall Street for a long time. However, things started to change after the 2007 financial crisis. Lehman Brothers filed for bankruptcy and led to greater scrutiny of the operations of other Wall Street bankers.

It was during at same time when Morgan Stanley and Goldman Sachs decided to become bank holding companies so that they can gain access to the Federal Reserve’s discount window. By transforming into bank holding companies, the two firms are able to tap into deposits from their retail customers.

      Difference between Investment Bank and Bank Holding Company

An investment banks help governments and companies raise funds by issuing and selling securities. They also provide advice on other financial transactions, such as acquisitions and mergers. Although they are regulated by the Securities and Exchange Commission, they operate with less supervision compared to commercial banks.

A bank holding company is an umbrella corporation that operates commercial banks that include accepting deposits from their customers. They are supervised by the Federal Reserve, as well as the Federal Deposit Insurance Corporation.

After the two firms became bank holding companies, there are no independent investment banks operating in Wall Street. Citigroup remained the largest holding company in the United States, followed by JP Morgan.

                             What’s Next for Wall Street Banking

Morgan Stanley and Goldman Sachs are still able to engage in their investment banking activities even after they became bank holding companies. However, their operations will be under the supervision of the Fed.

Going to the Cloud

Financial services are now moving to the cloud. Trading firms and asset managers are in the process of moving all their data to the cloud. As the technology advanced, cloud servers have become more safe and secure. Plus, they offer flexibility and agility to their customers.

Cloud computing has become more important in the past couple of years, that there are talks of the death of traditional brokerage firms. It will not be long when companies don’t need Wall Street bankers. Instead, they can do their business in the cloud, just like in the real estate and travel industries.

wall street cloud text on blue sky, business concept

One of the main roles of an investment bank is to serve as the third party between corporations and investors through initial public offerings. Investment banks offer underwriting services for new stock issues once the company goes public and looks for equity funding.

In the future, FinTech companies are able to offer the same services through cloud computing. Such company can partner with several banks to reduce exposure of a single bank. Everything will be transparent to ensure all transactions comply with existing rules and regulations.

The 2007 financial crisis has exposed the weaknesses of Wall Street banks. It is time to be gone with the old ways of doing things on Wall Street, and adopt new methods and technologies to make things more secure, safe and convenient for all stakeholders. And the key to all this is cloud computing.

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