Investment bank and financial services company Morgan Stanley has released its now-annual report on Bitcoin, Cryptocurrencies, and Blockchain. This time, their normal scepticism about Bitcoin (BTC) has been replaced by bullish enthusiasm. The report covers numerous topics and questions related to blockchain and cryptocurrency. In most cases, Morgan Stanley paints cryptocurrency as a “new institutional investment class”, one with profound implications for the world of finance.
Morgan Stanley is introducing derivatives trading based on cryptocurrencies. Futures contracts and swap trading will be the bulk of Morgan Stanley’s early client services, but the potential for future service and the actual exchange of digital assets remains a possibility for the investment giant.
Morgan Stanley’s Focus in “Update: Bitcoin, Cryptocurrencies, and Blockchain”
Of all of the topics covered in their review, Morgan Stanley spends the most time on stable coins. The report covers Tether, Gemini Dollar, Centre’s USDC, and Digix Gold Coin (DGX). MS emphasises to readers, many of whom are personal and institutional investors not well-acquainted with cryptocurrency, that stable coins are immune to the volatility that caused Bitcoin values to crash in 2017. This mechanism, they posit, reduces friction and makes the entire asset class more practical and potentially profitable for institutional investors.
The report also describes the evolution of Bitcoin’s fundamental utility in the financial world. In the beginning, they explain, Bitcoin functioned as digital cash. From there, it morphed into its role as a new fundraising mechanism (referring to BTC payments for ICO coins). Then Bitcoin distinguished itself as a “store of value”, much like gold. Finally, Bitcoin has emerged as a new kind of investment asset entirely. This last point should be exciting for anyone who wants to buy Bitcoin as an investment.
Citing major expansions from Coinbase, Goldman Sachs’ investment in BitGo, and Bain Capital’s blockchain endeavour, Morgan Stanley describes a corporate landscape on the verge of deep involvement with cryptocurrency. This is significant since this report is a way for Morgan Stanley to advertise blockchain and cryptocurrency opportunities to its own clients.
One of the most interesting points made in the report is Morgan Stanley’s opinion about cryptocurrency replacing weak state currencies. There are dozens of world currencies, the report says, which are fundamentally flawed. Not only will coins like Bitcoin be useful as a remittance currency for people in these nations, they may replace these dying currencies entirely, providing new decentralised payment methods for people who have never before had access to stable capital.
The Morgan Stanley report has numerous other highlights, but the abiding sense one garners is that this is a company that’s excited about cryptocurrency, and is now preparing for a world where blockchain and digital assets revolutionise our contemporary financial order.
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