Intercontinental Exchange, or ICE, the parent of the New York Stock Exchange, is developing an online Bitcoin trading platform for block trades, in further signs of mainstream financial world warming up to the wild sphere of cryptocurrencies.
The platform under development would allow large investors to buy and hold Bitcoin, the New York Times newspaper reported, citing emails and documents and four unidentified people close to the matter.
Nasdaq has also shown interest in cryptocurrencies with the exchange’s CEO Adena Friedman saying the bourse is open to becoming a cryptocurrency exchange over time as the regulation smooths and the crypto space gets matured.
Last week, the NYT had reported that the investment banking giant Goldman Sachs was planning to establish Bitcoin trading operation under the bank’s executive Rana Yared. The bank also made its first crypto-specific appointment recently by roping in Justin Schmidt, a former cryptocurrency trader, as its head of digital assets.
Meanwhile, Goldman’s top rival Morgan Stanley is hoping to be the first mover among the Wall Street giants in cryptocurrency trading. The firm is reportedly planning a crypto offering that will include traditional trading, ICOs, arbitrage and a host of crypto services for institutional traders. Morgan Stanley is also exploring collaboration with hedge funds and money managers to ensure sufficient liquidity.
On the demand side, big names such as George Soros and the Rockefeller family backed venture capital firm Venrock, are mulling investments in cryptocurrencies.
In Japan, banking giant SBI Holdings intends to launch its cryptocurrency exchange, SBI Virtual Currencies, by September this year, perhaps the country’s first wholly bank-owned crypto exchange.
Unlike the CME’s Bitcoin futures, the planned ICE platform would provide more direct access to Bitcoin as it will place actual tokens in the customer’s account at the end of the trade, the NYT report said.
Details of the platform are yet to be finalized and the project could still fall apart due to the hesitancy among the big Wall Street institutions in entering the rather unorthodox cryptocurrency world.
The exchange operator is also reportedly in talks with other financial institutions regarding setting up of the much complicated Bitcoin swaps that can be bought by banks, and that ends with the customer owning Bitcoin the next day. These swaps would have the backing and security of the exchange.
A swap contract would bring Bitcoin trading under the purview of the regulation of the Commodity Futures Trading Commission. And unlike the current crypto exchanges, Bitcoin trading would have to be operated under existing laws. As of now, the regulated crypto exchange LedgerX is the only one providing the kind of swaps that ICE is exploring, the NYT said.
ICE was also considering the launch of a swap contract linked to Ether, the second largest crypto by market cap. But the company dropped such plans due to the regulatory uncertainty surrounding Ether. The SEC is reportedly probing whether Ether could be classified as a security, while the coast is apparently clear for Bitcoin. LedgerX also dropped such plans on regulatory concerns.
While the moves by some Wall Street giants suggest that cryptocurrencies are being welcomed into the mainstream, luminaries like Warren Buffett, his confidant Charlie Munger, and Bill Gates, have once again slammed Bitcoin and its peers this week.
by Jyotsna V