Many of the largest banks, securities firms, and custodians in the United States, who were once skeptical of the emergence of digital assets, are now exhibiting their advances in the industry.
Wall Street, after much resistance, has a message for its numerous clients who have expressed an interest in investing in cryptocurrencies: OK, OK, we hear you.
“It’s a moment in time when the traditional industry has woken up and more broadly accepted this is happening,” said Walt Lukken, president and CEO of the Futures Industry Association, a large trade association for derivatives markets.
According to industry executives, their recent conversion has less to do with any epiphany about crypto’s utility and more to do with a simple reality: they don’t want to lose business to competitors.
Hedge funds and other professional investors were already trading cryptocurrencies, but executives indicated that many money managers, ranging from mutual fund behemoths to pension funds, are increasingly eager to enter the crypto markets.
Inflation and rising interest rates have dampened expectations for stock and bond returns, increasing the appeal of cryptocurrencies.
Money managers, who are banks’ biggest important clients, now want to pay them to trade, lend, structure, and preserve cryptocurrency. They are wary of relying on crypto companies for transactions involving other people’s money, preferring instead for existing financial organizations to resume their usual duties as intermediaries. Investors believe that Wall Street’s participation will help to stabilize the emerging markets.
Mike Demissie, head of digital assets and advanced solutions at Bank of New York Mellon Corp, stated, “It’s gotten to the point where everyone is at some point in the journey.” “If they aren’t actively investing in crypto, then they’re exploring it.”
As a result, most banks and custodians are developing strategies to handle cryptocurrency—albeit at various rates.
Fidelity Investments and Cowen Inc., for example, have begun to store and trade cryptocurrencies on their own or through joint ventures with digital-asset firms. Individual investors will be able to add bitcoin to their 401(k)s starting this week, according to Fidelity. According to the US Labor Department, the offering would jeopardize Americans’ retirement security.