Bloomberg, citing a person familiar with the matter, reports that Morgan Stanley is working to offer their clients “complex derivatives” trading tied to bitcoin as a way to enter the cryptocurrency market.
“The U.S. bank will deal in contracts that give investors synthetic exposure to the performance of Bitcoin…Investors will be able to go long or short using the so-called price return swaps, and Morgan Stanley will charge a spread for each transaction,” said the anonymous source according to Bloomberg.
This means that trading would not involve bitcoin directly but would rather be tied to futures contracts associated with the cryptocurrency. It is this sort of indirect speculative investment that many continue to debate as to whether it helps bitcoin, helps Wall Street, or if it could help both.
Prominent bitcoin expert Andreas M. Antonopoulos, for example, has been an outspoken critic of centralized bank entry into bitcoin with similar funds such as ETFs. Antonopoulos believes that these centralized points of entry into the bitcoin market fundamentally violates the peer-to-peer nature of the cryptocurrency and will lead to price manipulation. On the flip side, ETFs have been associated with an increase in price and trading volume, such as for gold.
Regardless of one’s stance, this marks yet another large Wall Street firm seeking entry into the bitcoin market. Goldman Sachs, for instance, is working on a bitcoin custody offer and bitcoin trading desk. There has also been bitcoin interest by Bank of New York, JP Morgan, and Fidelity.