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LONDON: Limbo: that's where Wall Street is when it comes to cryptocurrencies.
From the beginning, judging from the profits profits in one of the darkest corners of finance, the established companies have slowed down their already firm efforts to get a Bitcoin mania out of society. While no one has thrown in the towel, and some continue to develop a commercial infrastructure, most have withdrawn when the value of virtual coins has collapsed.
Take Goldman Sachs Group Inc., which has sought to position itself at the forefront of digital resources that skeptics consider primarily as a domain of daily and anarchist traders. Progress has been so slow as to be barely visible, according to people familiar with its encrypted business. Many in the industry now say it was quixotic to expect that last year's frenzy will result in a cryptic offer on Wall Street.
"The market has unrealistic expectations that Goldman or its peers could suddenly start a Bitcoin trading business," said Daniel H. Gallancy, CEO of SolidX Partners based in New York, who hopes to launch a Bitcoin ETF in the United States. "It was a top-of-the-market way of thinking".
Goldman remains a focal point for the expectations of an encryption settlement. The company was among the first in Wall Street to obliterate the future of Bitcoin, and people familiar with the issue said they were preparing a trading desk last year – the bank even provided its bankers at the New York Times for an interview on his plans. After considering a custody service for encrypted funds, the company has invested in the custodian bank BitGo Holdings Inc. It also offers derivatives on Bitcoin called non-deliverable forward.
The bank has yet to offer crypto trading and has received little traction for its NDF product, having signed only 20 customers, according to people familiar with the issue. Justin Schmidt, who was hired to direct his digital asset business, said at an industry conference last month that regulators are limiting what he can do. However, Goldman plans to add a digital goods specialist to his main brokerage division, the person said.
With regulators offering little clear indication of how they will classify the broad universe of tokens – such as commodities, securities or otherwise – banks and investment firms are treading with caution. Not even criminal and regulatory probes are helping.
Even after the plunge that has wiped out $ 700 billion from the value of cryptographic resources, believers stick to their screenplay.
Morgan Stanley, who hired Andrew Peel as head of digital assets at the start of the year, was technically ready to offer swaps monitoring Bitcoin futures at least since September, but so far he has not negotiated a single contract, according to a person who is familiar with the matter. A person with knowledge of the business stated that in September the contracts will be launched once the demand from institutional clients is proven.
Meanwhile, Citigroup Inc. has not traded any of the products it designed for cryptocurrencies within existing regulatory structures, according to a separate person with knowledge of their business. The so-called revenues of digital goods allow to negotiate by proxy without the direct ownership of the underlying currencies, a person who knows the plans announced in September.
In London, Barclays Plc, which has surveyed customers' interest in a cryptocurrency trading desk, has almost returned to its starting point. At the beginning of the year, the British bank has appointed two former oil dealers, Chris Tyrer and Matthieu Jobbe Duval, to explore the business. Tyrer, who led the digital-assets project, left in September, while Jobbe Duval followed two months later, according to people familiar with the matter. Barclays currently has no plans for an encryption desk, according to a spokesperson.
Citigroup and Morgan Stanley officials declined to comment on their cryptocurrency activities. For its part, "the primary objective of Goldman is to meet the needs of our customers in a thoughtful and safe," said spokesman Patrick Lenihan in New York.
Even after the staggering sell-off of digital activities in 2018 – a year after Bitcoin has reached the distance of US $ 20,000 now trading around $ 4,000 – cryptography professionals see the signs that institutions are preparing to return if necessary.
"The most important story is all the infrastructure that is being built now to allow institutional trading," according to Ben Sebley, a former Credit Suisse Group AG trader who is now in charge of brokerage at the NKB Encrypted Boutique Group.
Intercontinental Exchange Inc., owner of the New York Stock Exchange, said in August that it had created a suite of services to allow consumers and institutions to buy, sell, store and spend digital assets. Meanwhile, Fidelity Investments announced in October that it is preparing a new asset for the management of digital assets for hedge funds, family offices and commercial companies. Another encouraging sign for the bulls arrived the same month in the form of Yale University investment in an encrypted fund.
Even after the plunge that has wiped out $ 700 billion from the value of cryptographic resources, believers stick to their screenplay.
"It looks like progress is stopping, but nothing could be further from the truth," said Eugene Ng, a former trader at Deutsche Bank AG in Singapore who created Crypto Hedge Fund Circuit Capital. "The bear market will allow many of these institutions to build the right foundation without running the risk of building infrastructure without proper testing for fear of losing the gold rush."
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