Fidelity bank banner Bayelsa State banner
Banks finally embrace bitcoin

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

Share on facebook Yahoo mail icon Gmail icon Share on Google+

Views: 1,374


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 Share on Google+


 

CLASSIFIED ADS

REVEALED: 3 natural ways to get stronger erections, last 25 minutes on bed, and increase manhood size without using drugs. Also, Natural Prostrate Enlargement Remedy.. Get In HERE...

 

You may also like...
Obiano tasks South East traditional rulers on unity...

Only 600,000 Lagos residents pay tax out of...

Kano pilgrims board says no indigene killed in...

We have jammed Radio Biafra transmission signals —FG...

Obiano consoles victims of Onitsha Market fire disaster...

Nigerian Army bans officers, soldiers on duty from...

Radio Biafra: FG lied, says UK Government

European Union to expand cooperation with Nigeria

CAN Election: Akinola, others may shun Akwa Ibom...

Police Commissioner drowns in hotel swimming pool

Edo indigenes of protest in Abuja, ask Police...

US Marines kill more than 70 Taliban leaders...

 

Latest News Dasuki: Court serves warrant of release on DSS, AGF •Family, friends, associates await release Buhari declines assent to 4 Bills Reps to IGP: Beef up security in Adamawa EFCC re-arraigns Orji Kalu, raises charges to 39 counts Buhari assures ICC of free and fair elections in 2019 SERAP to INEC: Prosecute perpetrators of vote buying in Ekiti election or face legal action Ondo partners World Bank, FG on Livestock Project Senate confirms Smith as PSC chair Darlon Security: PDP chides APC, accuses of playing politics with security matters India: 18 men rape 11-year-old for several months ExxonMobil Lagos HQ shut by protesting workers Boko Haram attacks: Buratai meets war commanders

 

Most Read NUDE PHOTO OF OMOTOLA JALADE-EKEINDE surfaces online (361,673 views) Nigerian female sex addict opens up, says ‘I like it with both men and women’ (358,231 views) Shameless Genevieve Nnaji exposes breasts in public (286,553 views) Finally named: The full list of friends of Nigerian female sex addict who prowled Facebook (235,167 views) OLUMBA OLUMBA OBU (the one who called himself God) IS DEAD (214,365 views) Igbo scholar disgraces Femi Fani-Kayode •Demolishes claims on Igbo/Yoruba history with facts and figures (212,469 views) Breaking News: POPULAR REVEREND CONVERTS TO ISLAM in Kaduna (Nigeria) (186,321 views) OBJ’s son reported dead in Lagos plane crash •Names of more victims emerge (168,262 views) THE FINAL DISGRACE: Igbo scholar unleashes more facts about Igbo/Yoruba history, finishes off Femi Fani-Kayode with second article (156,227 views) My wasted years in Olumba Olumba Obu’s Evil Brotherhood (152,600 views) Lagos plane crash: Journalist releases victims’ names (147,496 views) Gunmen kill ASP, 2 other police officers in vain bid to kidnap Rivers PDP chieftain (138,745 views)

 

Categories Advertorials (3) African Press Organisation (81) Art & Literature (52) Business & Economy (3,345) Business Verdict (45) Columnists (886) Complaints & Requests (94) Enterprise & Opportunities (207) Entertainment (516) Features (614) Global Business Monitor (284) International (2,135) Interview (157) Live Commentary (28) Love Matters (127) News (37,192) Opinion (1,024) Pidgin (10) Politics (5,590) Religion (783) Sports (1,612) Stock Watch (33) AMA & Al Jazeera Global Update

 

CBN banner

Firstmobile banner

 

 

NEWS EXPRESS TV

FRANCE vs CROATIA 4-2 Highlights & Goals 2018

 

APO Group Partner

 

 

CLASSIFIED ADS

GOCOP Accredited Member

GOCOP Accredited member

 

 

Africa Media Agency and Al Jazeera

Advertisement