Morgan Stanley Working On a Bitcoin Derivative Product For Clients
As per the latest Bloomberg report, Wall Street giant Morgan Stanley is working on a Bitcoin derivative product for institutional clients. Citing an unnamed source familiar with the matter, the banking giant wants to give is clients an indirect exposure to the cryptocurrency market.
The unidentified source told Bloomberg that investors can use the price-return swaps to go long and short on the digital asset. The price swaps be will be tied to the Bitcoin futures contract instead of trading Bitcoin directly. Morgan Stanley will charge a spread for each transaction, said the source.
The bank is currently exploring client demand and will begin the trading soon, once the internal approval process is complete. An official spokesperson for Morgan Stanley has declined to comment this report yet,
The news comes just in a few days of Goldman Sachs CFO announcement of the bank working on a Bitcoin derivative for clients. Martin Chavez, Goldman Sachs CFO said that the banking giant is working on a derivative product for Bitcoin as the "clients want it.” Chavez said: "The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they're settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges.”
Following the launch of Bitcoin Futures last year, several Wall Street giants have explored different investment products surrounding digital assets. However, companies have found it increasing difficult to convince the regulatory bodies for such products.
The Bitcoin ETF proposals have been turned down several times by the Securities and Exchange Commission (SEC) citing issues of extreme market volatility and high risks for investors. The latest report suggests that popular cryptocurrency exchange Coinbase is working together with asset management giant BlackRock on a cryptocurrency ETF.
Another Wall Street giant - Citigroup is supposedly working on a low-risk investment product for institutional investors. Dubbed as “Digital Asset Receipts (DARs)”, the product gives investors the exposure to crypto market without actually holding the digital currency. The Digital Asset Receipts (DARs) is jointly developed by Citigroup’s capital markets origination team and the depository receipts services team.