Morgan Stanley Says Crypto An Institutional Asset
In the latest cryptocurrency news, various institutional investors are increasingly getting involved in Bitcoin and other digital currencies. Meanwhile, the number of retail investors in the space is staying stagnant. All of these were laid out in a new report courtesy of Morgan Stanley.
Bitcoin As ‘Digital Cash’
In an update to “Bitcoin Decrypted: A Brief Teach-In and Implications,” the global banking giant’s research division delved into the last six months of bitcoin and highlighted certain trends it noticed. The report is dated October 31.
Perhaps most notably, the report emphasized its “rapidly morphing thesis,” which began by defining BTC as “digital cash” and noting that investors had full confidence in it, to a solution for issues in the financial system, to a new payment system to ultimately a new institutional investment class.
A good number issues and discoveries around the Bitcoin ecosystem have caused the thesis to evolve, including the permanent ledger recording all transactions, a number of hacks, hard forks, new technologies which are cheaper than bitcoin, market volatility and other concerns, the company’s report explains.
Involvement Of Financial Institutions
As such, the group’s current thesis is that BTC is a “new institutional investment class,” and has been for almost a year. The amount of crypto assets under management has been increasing since January 2016, with $7.11 billion currently being stored by hedge funds, venture capital firms and private equity firms.
The fact that major financial institutions are increasingly getting involved supports this thesis, citing Fidelity’s new crypto services division, investments in Seed CX, BitGo, and Binance, regulatory approvals and Coinbase’s recent fundraising round.
That being said, the report did cite three issues clients had with investing in the cryptocurrency space: regulatory uncertainty, a lack of regulated custodian solutions, and a current lack of large financial institutions in the space.
Stablecoin trading
The report also delved into a popular topic as of late: stablecoins, or types of cryptocurrencies that seek to enable some form of price stability.
Bitcoin is “moving increasingly towards trading vs the stable coin USD-Tether (USDT) [sic],” the report states, referring to the controversial, dollar-linked token operated by Tether. Half of all current bitcoin trading is now against another digital asset, continuing a trend which began last year.
The fact that many crypto exchanges do not accept fiat currencies contributed to this state of affairs, the report’s authors said.