Morgan Stanley, one of the largest U.S. investment banks, is the latest big Wall Street name to consider entering the bitcoin arena. Reports surfaced Thursday the New York-based company is looking to offer bitcoin derivatives trading for some clients.
“Morgan Stanley is reportedly preparing to offer bitcoin swap trading for clients, joining other top banks in a sectorwide effort to explore digital currencies,” reports CNBC. “The bank will provide derivatives that grant investors exposure to the performance of the world’s largest cryptocurrency, Bloomberg News reported, citing sources familiar with the matter.”
Bitcoin futures debuted on the Chicago Board Options Exchange (CBOE) in December with CME Group following suit just a few days later. The derivatives linked to the largest digital currency by market value are seeing a steady rise in activity.
Derivatives help increase liquidity and improve markets for an asset category by allowing investors to bet on ups and downs of an asset, evening allowing individuals to adopt market-neutral strategies.
Nasdaq Inc. is still considering entering the bitcoin futures competition. Market observers previously expected Nasdaq to launch futures on the digital currency this year. The exchange operator has previously said that if it moves forward with bitcoin futures, its product will be different from those offered by Cboe and CME.
More On The Morgan Stanley Move
“Traders will have the choice to go either long or short using so-called price return swaps; Morgan Stanley will charge a spread for each transaction, the source told Bloomberg,” reports CNBC. “Trading will begin once an internal approval process is complete and there is proven client demand, the report said.”
Recently, reports emerged that Morgan Stanley rival Goldman Sachs could scuttle plans for a cryptocurrency trading desk.
“In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering,” Goldman Sachs said in a statement.
“Wall Street’s burgeoning interest in crypto comes despite a yearlong slide in the value of bitcoin, which has lost more than half its value over the last 12 months. That may help explain why none of the major U.S. banks has made a more forceful entry into the space, opting instead for the comparative safety of regulated futures markets,” according to CNBC.
For more information on the cryptocurrency market, visit the Bitcoin category.