Morgan Stanley Bitcoin Derivatives are Ready to Go
Morgan Stanley (NYSE:MS) plans to offer its customers complex derivatives that will be tied to Bitcoin (BTC), Bloomberg reported this morning. The Morgan Stanley Bitcoin derivatives will push the investment bank in the running with its competition currently dabbing in the cryptocurrency space.
According to a person familiar with the venture, Morgan Stanley, one of the world’s largest investment banks, is trying to create ways for its client to get involved in the digital currency market.
Institutional investors have shown that they don’t want to actually own any Bitcoin but more so want to trade for or against the price of it. The US bank will deal with contracts that give its investors synthetic exposure to the performance of cryptocurrency, the individual involved in the matter told Bloomberg.
The bank is already prepared to offer Bitcoin and plans on launching when institutional client demand is proven. Morgan Stanley investors will be able to go long or short using their so-called price return Bitcoin swaps.
The investment bank will charge a spread for each transaction, the person said.
Many of Wall Street’s biggest banks are pushing ahead their plans to offer the derivatives tied to Bitcoin, despite the crypto market’s downturn in January.
Citigroup Inc. (NYSE:C) and Goldman Sachs Group Inc (NYSE:GS) are also preparing new products that are tied to Bitcoin. Last week, there were rumors floating around that Goldman Sachs had abandoned its plans to build a crypto trading desk. This put the entire crypto market in a total tailspin, but two days later the bank’s CFO called the news “fake.”
Once banks see a demand for products such as Bitcoin derivatives, they are more than equipped to start offering them. The question then remains is, when will this happen?
Will it take a monumental rise in the digital currency to spark institutional interest again? We will soon find out.
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