As crypto goes increasingly mainstream, more Wall Street companies and banking giants are feeling the pressure to offer crypto exposure to their clients. However, they need a way to do so safely, without attracting the ire of American regulators.
A look into the crypto crystal ball
A Reuters Breakingviews prediction for 2022 suggested that banks would continue to face this bind, even as some explore products like Bitcoin-backed loans.
The report noted,
“What would really open the flood gates for the largest banks would be the regulatory nod to get directly involved in the custody and trading of digital assets. Among other things, that would help stop lucrative hedge fund clients from going elsewhere for their crypto needs.”
Investment analyst Anthony Pompliano touched upon a similar point during his own 2022 crypto outlook. The exec noted that with more mainstream adoption, Wall Street companies would have to develop their own crypto strategy – even if the strategy was to stay out of crypto.
He said,
“…2021 was really the year that we saw the mainstream Wall Street organizations and also corporations say, ‘hey, look, I got to have a strategy.’ The strategy may be that I’m going to sit it out. But I at least have to have the conversation to go ahead and figure out ‘should I buy some, should I not, should I build a company in this space, should I build a product…’ “
On the other hand, MicroStrategy CEO Michael Saylor – who recently added another 1,914 Bitcoin to the company’s treasury – had another theory. He instead suggested that banking companies getting into crypto could possibly destabilize the economy. During an interview with Peter McCormack, he said,
“…do I mind if JP Morgan starts custodying 100 billion dollars of Bitcoin? They’ll pick up the phone, call their clients, all their clients will start buying Bitcoin, and the price of Bitcoin will go to the roof, and it will demonetize 100 trillion dollars of other assets.”
However, it’s important to note that not all Wall Street influencers are bullish on crypto. In fact, JP Morgan’s own boss Jamie Dimon said Bitcoin was “worthless” and refused to accept crypto as a currency.
An offer you can’t refuse
One reason why many banking giants are eyeing crypto could be thanks to Bitcoin’s performance in 2021. According to a report by Arcane Research, gold fell by 7% while the S&P 500 went up by 28%.
This, however, pales in comparison to the king coin, which spiked by 73% despite the ups and downs of the COVID-19 pandemic.
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