Big Banks Raced Into Cryptocurrency Markets, But Now…

SAN FRANCISCO — Big banks that raced into cryptocurrency markets seeking both profits and to avoid missing an emerging opportunity are now tapping the crypto-brakes.

Crypto

Among them is Goldman Sachs, which created a cryptocurrency exchange, LedgerX, that would cater to big investors with sophisticated financial contracts.

“It was definitely part of the original plan that institutions would be a big part of this market,” one person with Goldman Sachs told the New York Times. “We were wrong.”

A year after opening its Bitcoin trading operation, customer interest has been weak, and the bank has not received regulatory approval to buy and hold actual Bitcoins for customers, according to a person familiar with the operation who spoke with the Times.

NYSE, CBOT Announce Plans

Meanwhile, the parent company of the New York Stock Exchange has been forced to delay the opening of the cryptocurrency exchange it announced in 2018, and there is still no clear sign of when it will get the approval needed from regulators, the Times reported. 

In addition, the Chicago Board Options Exchange said last month it was going to stop offering a Bitcoin trading contract that it started with great fanfare in late 2017, the Times added.

“The faltering efforts among big financial outfits are part of a retrenchment in the cryptocurrency industry after last year’s bust, when the price of a single Bitcoin fell from nearly $20,000 to around $4,000,” the Times stated. “It has lingered there for months, but had an unexpected jolt on (March 26), briefly exceeding $5,000.”

Currently, the average price of one Bitcoin is about $4,734, the Times said, pointing to data provided by Blockchain.info, a news and data site.

“The smart money knows that crypto is not ready,” said Ciaran Murray, a cryptocurrency trader in London, told the Times, adding Murray tried to set up a hedge fund focused on digital tokens, but he found that when investors dug into the technology they were turned off.

‘Not a Death Blow’

According to the Times, Murray and other cryptocurrency believers are adamant that the problems are not a death blow for Bitcoin and the technology it introduced. Goldman Sachs, for example, is retooling LedgerX and applying for regulatory approval to open trading to small retail investors, whose interest in cryptocurrencies has held up a bit more.

“In Silicon Valley, Jack Dorsey, the chief executive of Twitter and the online payments company Square, announced last month that he was looking to hire three or four Bitcoin developers,” the Times added. “He compared the technology to the early Internet, both in its problems and its potential.”
But some core issues remain, with the Times noting the structure of Bitcoin makes it hard to maintain control.
“All Bitcoins are accounted for on a decentralized ledger, known as the blockchain, which no single institution controls. Anyone can have access to it, giving free rein to bad actors,” the Times said.

 

 

Section: Standard
Word Count: 590
Copyright Holder: CUToday.info
Copyright Year: 2019
Is Based On:
URL: http://www.cutoday.info/Fresh-Today/Big-Banks-Raced-Into-Cryptocurrency-Markets-But-Now