Save Austin Fair Yudala banner
Banks finally embrace bitcoin

By Hugh Son and Cindy Roberts on 06/10/2017

Share on facebook Yahoo mail icon Gmail icon

Views: 1,022


At first, bitcoin was a way to make payments without banks. Now, with more than $100out banks. Now, with more than $100bn stashed in digital currencies, banks are debating whether and how to get in on the action.

Goldman Sachs CEO Lloyd Blankfein tweeted on Tuesday that his firm is examining the crypto-currency. Other global investment banks are looking into facilitating trades of bitcoin and other crypto-currencies, according to industry consultants. Bitcoin has surged more than 300% this year, drawing the attention of hedge funds and wealthy individuals.

“They’re clearly receiving interest from their clients, both from retail investors and on the institutional side,” said Axel Pierron, MD of bank consultant Opimas. “It’s highly volatile, it’s highly illiquid when you need to trade large volumes, so they see the opportunity for a new asset class which would require the capability of a broker-dealer.”

But bitcoin presents Wall Street with a conundrum: how do banks, that are required by law to prevent money-laundering, handle a currency that’s not issued by a government and that keeps its users anonymous?

The debate has played out in the open recently, with JPMorgan Chase CEO Jamie Dimon and BlackRock CEO Larry Fink saying that bitcoin was mostly used by criminals, while Morgan Stanley CEO James Gorman took a more measured stance, saying it was “more than just a fad”. On Wednesday, UBS Group chairperson Axel Weber, a former president of Germany’s central bank, said he was sceptical about bitcoin’s future because “it’s not secured by underlying assets”.

There’s even tension within some banks. On the same day Dimon trashed bitcoin, calling it a “fraud,” his firm’s private bank hosted a panel stocked with crypto-currency investors.

Handling bitcoin would invite scrutiny from every major US regulator, according to Joshua Satten, director of emerging technologies at Sapient Consulting. “From the perspective of the US treasury, do you classify it as an asset class or a currency?” Satten said. “If banks are starting to manage and hold bitcoin for their clients, you would have the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation looking at how they classify the assets on their balance sheet and how they state the assets for the portfolio of a client.”

China’s crackdown

Also, banks need to avoid antagonising governments that are increasingly concerned about this area. For instance, China is cracking down by shutting crypto-currency exchanges.

Then there’s the risk that stems from its high volatility and lack of correlation to other major assets. “What are they going to do if bitcoin drops for a given client and they’ve given that client a ton of leverage on margin, and that client only has assets in bitcoin?” Satten said.

Derivative contracts could help. CBOE Holdings, the owner of the Chicago Board Options Exchange, announced in August that it plans to introduce bitcoin futures this year or next. This could help traders hedge positions. Banks are also exploring creating derivatives and using bitcoin in international trade finance to avoid exchanging currencies, Pierron said.

What isn’t in doubt is the interest from some investors. Hedge fund manager Mike Novogratz plans to start a $500m hedge fund to invest in crypto-currencies, initial coin offerings and related companies, which would be the largest of a growing group. There are 75 funds investing in the space, according to Autonomous Research.

Bitcoin already has a toehold in mainstream finance. In July, Falcon Private Bank said it was the first Swiss bank to offer bitcoin asset management to its clients. In the US, both Fidelity Investments and USAA let clients view their bitcoin balances if their accounts are linked to the Coinbase exchange.

Drugs, Ransoms

The qualities that have made bitcoin the payment form of choice for drug deals and ransom demands — it runs on a decentralised web of computers around the world that sidesteps regulators and banks — are also what makes it hard to control by governments. Further adoption of bitcoin may require central banks and regulators to come to a consensus on how the new digital currencies fit into the existing framework.

“Can it be sanitised for the reserve banks and regulators and compliance departments of banks around the world so you can root out the grey money, the stuff you hear about coming from darknet markets?” Jesse Chenard, CEO of blockchain start-up MonetaGo, said on Tuesday at a conference held by Columbia Business School. Banks need “to have some assurances of who they’re transacting with and the provenance of that coin”. (Bloomberg)

Source News Express

Posted 06/10/2017 1:18 PM

 

Share on facebook Yahoo mail icon Gmail icon


 

CLASSIFIED ADS

Loss Off Your Belly Fats, Upper Arm Fat and Body Fats In 2weeks Time.. Click HERE To Start Now!

Let us build the most comprehensive online database of worthy and credible Nigerians from all walks of life. It is worth doing!

 

You may also like...
Heavy rain displaces 2,000 in Katsina

BREAKING NEWS: 9 suicide bombers target Maiduguri

What’s wrong with this boy?: Messi turns down...

Gunmen kill NFF top shot

2 Federal High Court Justices sacked for misconduct...

Heart attack claims football legend •Ronaldo, others mourn...

March Polls: IGP orders CPs to mop up...

UK Govt. demands £18m from Ibori •Why he...

Benue Amnesty Programme ends, 366 arms recovered from...

RIGHTSView: N630B FOOD IMPORTS AND THE FLIGHT OF...

Chibok girls to be freed ‘very soon’: FG...

EFCC arraigns 3 for oil theft, another 3...

 

Latest News Fidelity Bank pioneers tax payments, revenue collection with Instant Banking Solution NIMASA vows to fight piracy to the end PDP to decentralise power to states’ executives UN allocates $13.4m to support 1m suffering Nigerians Protesters shut down Abuja, call on Nigerians to support reformation of SARS 2019: Tinubu tackles Okorocha over mode of selection of APC presidential candidate NAF appoints Air Tactical Commander, sponsors training of female fighter pilot Anambra youths protest move to scrap SARS NSE market capitalisation loses N120b, amid sell pressure UEFA Champions League: Real Madrid draw formidable PSG, as Chelsea get FC Barcelona FG releases N1.2trn for 2017 capital expenditure Abia screens applicants for youth creation and employment programme

 

Most Read Nigerian female sex addict opens up, says ‘I like it with both men and women’ (300,697 views) NUDE PHOTO OF OMOTOLA JALADE-EKEINDE surfaces online (285,428 views) Shameless Genevieve Nnaji exposes breasts in public (230,308 views) Finally named: The full list of friends of Nigerian female sex addict who prowled Facebook (193,258 views) Igbo scholar disgraces Femi Fani-Kayode •Demolishes claims on Igbo/Yoruba history with facts and figures (183,338 views) OLUMBA OLUMBA OBU (the one who called himself God) IS DEAD (169,955 views) Breaking News: POPULAR REVEREND CONVERTS TO ISLAM in Kaduna (Nigeria) (147,105 views) THE FINAL DISGRACE: Igbo scholar unleashes more facts about Igbo/Yoruba history, finishes off Femi Fani-Kayode with second article (132,431 views) OBJ’s son reported dead in Lagos plane crash •Names of more victims emerge (130,508 views) Lagos plane crash: Journalist releases victims’ names (118,980 views) Gunmen kill ASP, 2 other police officers in vain bid to kidnap Rivers PDP chieftain (115,440 views) My wasted years in Olumba Olumba Obu’s Evil Brotherhood (111,965 views)

 

Categories Advertorials (3) African Press Organisation (81) Art & Literature (33) Business (2,815) Business Verdict (27) Columnists (776) Complaints & Requests (94) Enterprise & Opportunities (195) Entertainment (419) Features (522) Global Business Monitor (192) International (1,686) Interviews (138) Live Commentary (28) Love Matters (92) News (30,944) Opinion (844) Pidgin (9) Politics (4,209) Religion (653) Sports (1,380) Stock Watch (25) AMA & Al Jazeera Global Update

 

CBN Banner advert

CBN Words on marble

 

 

MOBO Awards

 

APO Group Partner

 

CLASSIFIED ADS

Loss Off Your Belly Fats, Upper Arm Fat and Body Fats In 2weeks Time.. Click HERE To Start Now!

Let us build the most comprehensive online database of worthy and credible Nigerians from all walks of life. It is worth doing!

GOCOP Accredited Member

GOCOP Accredited member

 

 

Africa Media Agency and Al Jazeera

Advertisement



 

 

CLASSIFIED ADS

Let us build the most comprehensive online database of worthy and credible Nigerians from all walks of life. It is worth doing!

Loss Off Your Belly Fats, Upper Arm Fat and Body Fats In 2weeks Time.. Click HERE To Start Now!