The Wall Street giants have been mulling the idea of joining the cryptocurrency playground, marking a dramatic shift toward the future of Bitcoin and blockchain technology.
On May 7, The New York Times, Intercontinental Exchanges (ICE), the parent company of the New York Stock Exchange (NYSE) has been working on an online trading platform that allows big investors to buy and hold Bitcoin. The newspaper cited emails and documents it obtained as well as conversations with four people with knowledge of the still-confidential project.
While details of the platform have not been finalized, there were discussions between ICE and other financial institutions about setting up a new operation through which banks can buy swaps, a kind of contract that results in the customers owning Bitcoin the next day — backboned and protected by the exchange. Bitcoin swaps contract will allow investors to trade under the regulations of the Commodity Futures Trading Commission and other existing laws.
In March, ICE first entered the cryptocurrency market with a cryptocurrency data feed and is now ready to officially create a bitcoin exchange. If ICE follows through on its plan, it would be a great step for the cryptocurrency market as ICE would be the first established traditional exchange operator to launch such a crypto venture in the US.
Along with ICE, the Wall Street’s investment banking giant, Goldman Sachs, previously went public its intention to pioneer a Bitcoin trading unit at a Wall Street bank, which will starts from June 2018. Goldman will at first initially only be trading futures contract based on Bitcoin’s price. User won’t be able to directly exchange the cryptocurrencies. But the bank is finding out how to get regulatory approval and eliminate the risks related to holding actual Bitcoins.
LedgerX, an exchange that specializes in cryptocurrency derivatives, is currently the only exchange that offers the kind of swaps that ICE has mentioned. LedgerX has experienced increasing trading volume in recent months, but ICE would start with an edge as every large financial institution is already hooked into it.
Most lately, understanding the safety needs of Bitcoin on Wall Street, Bitcoin specialist Coinbase has announced its entry into the data center business as part of a suite of services for institutional investors, called Coinbase Custody. With this offering, the company will provide a centralized pool of liquidity for all its cryptocurrency products, which currently include Bitcoin, Ethereum, Bitcoin Cash and Litecoin.
Other trading firms have also joined crypto trading like Jump Trading and DRW from Chicago. Since late 2017, the competitors of ICE, CME Group and Cboe Global markets decided moved into the crypto sector with bitcoin futures contracts. Another recent player, NASDAQ in the same time had informed that it would become “open to becoming a crypto trading platform” in the future.
Banks, financial institutions, and many others are adopting cryptocurrencies and blockchain technology faster than expected. For almost 10 years, Wall Street’s opinion of the premier cryptocurrency has ranged from general indifference to outright disapproval. Now, should the plans go ahead, ICE, Goldman and other Wall Street giants would become parts of an increasingly large chunk of traditional finance engaging with cryptocurrencies, marking the position of which once had a rough start, now strongly improved.
Collected and edited by Remitano.