- Older Financial Institutions are now riding the cryptocurrency wave.
- JP Morgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS), and a host of other traditional investment banks have recently got involved in cryptos.
- Bitcoin, the world’s largest cryptocurrency is the most common digital asset offered to investors.
- Institutional investors getting hold of cryptocurrencies is beneficial for the value of the asset.
The proliferation of altcoins and other DeFi solutions has caught the eye of everyone from governments, to exchanges, banks, and investors. More than ever, large corporations are opting to hold cryptocurrencies and infuse blockchain solutions in their company.
Led by Elon Musk, following the announcement that Tesla (NASDAQ:TSLA) will accept payments in Bitcoin, other technology giants like Microsoft (NASDAQ:MSFT) and Walmart (NYSE:WMT), have begun to infuse blockchain technology into their systems.
Traditional Finance Invests in Cryptocurrencies
Older financial institutions were sceptical about cryptocurrencies over the years citing their high volatility, risk of fraud and potential government bans. However, a lot has changed and traditional Financial Institutions are incorporating cryptocurrencies into their service packages.
China’s government is rolling out its digital currency which it says would challenge Bitcoin and other altcoins. With the Chinese government on board with blockchain technology, the rush of cryptocurrencies will continue.
The Bank of New York MellonCorp, America’s oldest bank, is now in the crypto game and has announced that it plans to hold and transfer Bitcoins and other digital assets for its customers. The Chief Executive of BNY Mellon (NYSE:BK), Roman Regelman, in explaining the institution’s move, stated that “digital assets are now mainstream”. The bank will now act as custodians for the cryptocurrencies of their clients instead of the money managers looking for other custodians.
Goldman Sachs, an investment banking giant aims to bring crypto investments onboard in the second quarter of 2021. Mary Rich, the head of Global Digital Assets of Goldman Sachs made known the company’s cryptocurrency direction. The big US banks are now looking for ways to jump into the bitcoin market, since incorporation is an inevitability.
A leader in banking, Morgan Stanley (NYSE:MS), becomes the first American bank to offer its clients a piece of cryptocurrencies. The bank is allowing only its richer clients to invest in the volatile asset. Investment firms must have up to $5 million to participate in the new stake. Bitcoin is now an asset class offered by the bank. Clients can now access three funds which can give them access to Bitcoin.
JP Morgan Chase is also among big banks that is set to offer its clients access to Bitcoin investments. The Bitcoin is intended to be available the summer of 2021.
On the Flipside
- Most investments offered by these traditional banking giants are for rich clients only and aren’t all-inclusive
- The investment banks are somehow late to the game as asset management clients and other crypto investors have already settled in the bitcoin market without them
Digital Assets are the Biggest Gainer
Bitcoin, the world’s largest cryptocurrency is set to benefit from the move of the banks. If these banks allow their clients to hold cryptocurrency investments, the value of digital assets will increase; the market capitalization could surge like never before. Furthermore, as financial giants embrace cryptos, the fear for a potential government ban is greatly reduced. This leads to investor confidence which will reflect in the value of the assets.
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