As the value of digital currencies has fallen, some financial firms — including Goldman Sachs, Citigroup, Morgan Stanley and Barclays — have put their plans to offer cryptocurrency trading to clients on hold.
“The market had unrealistic expectations that Goldman or any of its peers could suddenly start a Bitcoin trading business,” said Daniel H. Gallancy, chief executive officer of SolidX Partners, which wants to launch a Bitcoin exchange-traded fund (ETF) in the U.S., according to Bloomberg. “That was top-of-the-market-hype thinking.”
While Goldman initially was positioning itself as a leader in digital assets, sources say that the firm’s progress has been slow. Last month, the head of its digital asset business, Justin Schmidt, complained that regulators were limiting what the company can do. Still, sources say Goldman intends to soon hire a digital-assets specialist for its prime brokerage division.
As for Morgan Stanley, it could have started offering trades tracking bitcoin futures back in September, but has not carried out any business, according to a source. Citigroup has also failed to trade any of its crypto-based products, while Barclays currently has no plans for a crypto trading desk despite the fact that it recently hired two former oil traders to explore the business.
Yet crypto supporters are choosing to look at things from a positive perspective.
“The more important story is all the infrastructure that’s being built now to enable institutional trading,” according to Ben Sebley, who is head of brokerage at crypto boutique NKB Group.
For example, Intercontinental Exchange, owner of the New York Stock Exchange, has developed a suite of services to buy, sell, store and spend digital assets. And Fidelity Investments is launching a business to manage digital assets for hedge funds, family offices and trading firms.
“It appears as if progress is coming to a halt, yet nothing could be further from the truth,” said Eugene Ng, a former Deutsche Bank AG trader in Singapore who has set up crypto hedge fund Circuit Capital. “The bear market is going to allow many of these institutions to build the proper foundations without rushing to build-out infrastructure without adequate testing for fear of missing out on a gold rush.”