Traditional financial market players have already developed or are developing cryptocurrencies-related businesses. The products being offered by these companies are diverse. They range from cryptocurrency-based investment funds to platforms for buying and selling these assets. The goal is to attract the institutional investor to the cryptocurrency segment. Institutions in general seek greater governance and need regulated companies to invest in crypto, and that’s what these companies are aiming at.
One of the companies in search of the institutional investor for the cryptocurrency area is Fidelity Digital Assets. The company is the digital assets arm of Fidelity Investments. A traditional investment fund manager, pension funds and other financial services provider based in the United States, it has an additional US$ 7 trillion under its management. The company offers custody and crypto trade services, with a focus on the institutional market.
Another traditional financial market player, Intercontinental Exchange (ICE), also decided to bet on cryptocurrencies. The owner of the New York Stock Exchange (Nymex) created Bakkt, the cryptocurrency settlement and custody arm. The company offers a fully regulated platform for buying and selling bitcoin futures contracts for institutional investors. The differential of Bakkt’s performance in relation to futures that already existed, such as Bitmex, is the possibility of physical delivery of the asset. Since March, about 300 BTC, or US$ 2 million, have been physically delivered.
Similarly, CME has created a platform for buying and selling bitcoin futures. The platform offers institutional investors the possibility to hedge their positions in bitcoin through futures purchases or futures options. CME’s daily bitcoin futures trading volume reached US$ 1.1 billion on February 18th.
Banks seek institutional investor in cryptocurrencies
Traditional banks are also keeping an eye on blockchain possibilities. J.P. Morgan was the first U.S. bank to successfully create and test a dollar-matched token to process international payments among its clients, enabling instant transfer of resources between institutional clients. Besides, the digital currency will be used for securities transactions. Another intended use is in treasury services provided by the bank to large companies that have subsidiaries in different locations around the world. JP Morgan moves US$ 6 trillion around the world on a daily basis.
In Brazil, Banco Plural has established itself as the largest partner of companies in the area of cryptocurrencies, mainly exchanges, and continues to expand in this market. The institution was created in 2009 by the former partners of Pactual as an asset management, and in 2013 began to operate as a commercial bank, acquiring several other companies. In 2017, seeing the growth of the cryptocurrencies sector, the bank began to assist ICOs and bought a minority stake in a crypto exchange called Flow.
In addition to banks, stock exchanges are also keeping an eye on this segment. The Swiss Stock Exchange (SIX Swiss Exchange) had announced in July 2018 the launch of a fully regulated cryptocurrency buying and selling platform, called the SIX Digital Exchange (SDX), which was forecast for mid-last year. SIX launched an initial version of the digital exchange and securities exchange (CSD) and postponed the full launch for the fourth quarter of 2020 due to legal and regulatory issues. The exchange is still in negotiations with partner banks, whose services it will offer on the platform. SIX must have an owner token and a stablecoin.
Fund wants to use Stellar blockchain
Another traditional institution had also announced blockchain-related businesses. Franklin Templeton, a US$ 700 billion global investment fund under management, filed a preliminary prospect last year at SEC to make a public offering through Stellar’s blockchain. Although the company will not launch a cryptocurrency, the fund’s transaction data will be stored on a blockchain, with the aim of providing transparency to shareholders and also allowing reduced settlement times.