Bitcoin Sees Wall Street Warm to Trading Virtual Currency

[Hydrogen]

SAN FRANCISCO — Some of the biggest names on Wall Street are warming up to Bitcoin, a virtual currency that for nearly a decade has been consigned to the unregulated fringes of the financial world.

The parent company of the New York Stock Exchange has been working on an online trading platform that would allow large investors to buy and hold Bitcoin, according to emails and documents viewed by The New York Times and four people briefed on the effort who asked to remain anonymous because the plans were still confidential.

The news of the virtual exchange, which has not been reported before, came after Goldman Sachs went public with its intention to open a Bitcoin trading unit — most likely the first of its kind at a Wall Street bank.

The moves by Goldman and Intercontinental Exchange, or ICE, the parent company of the New York Stock Exchange, mark a dramatic shift toward the mainstream for a digital token that has been known primarily for its underworld associations and status as a high-risk, speculative investment.

The new interest among Wall Street power brokers also represents a surprising new chapter in the renegade history of Bitcoin.

The virtual currency was created after the 2008 global financial crisis by a still-anonymous programmer who used the name Satoshi Nakamoto. The idea was to replace the existing banking structure with an online alternative that couldn’t be controlled by a handful of powerful organizations.

But instead of being replaced, the old banks are beginning to assert their own role in the unorthodox financial world of virtual currency, sometimes called cryptocurrencies.

While Bitcoin was originally intended to be used by consumers for all sorts of transactions — without any financial institutions getting involved — it has mostly become a virtual investment, stored in digital wallets and traded on mostly unregulated exchanges around the world. People buy Bitcoin in the hope that its value will go up, similar to the way they purchase gold or silver.

Details of the platform that Intercontinental Exchange is working on have not been finalized and the project could still fall apart, given the hesitancy among big Wall Street institutions to be closely associated with the Wild West of virtual currencies. A spokesman said that the company had no comment.

Many corporations and governments have expressed interest in the technology that Bitcoin introduced, particularly a form of database known as the blockchain.

Some large financial exchanges, including the Chicago Mercantile Exchange, have already created financial products linked to the price of Bitcoin, known as futures. But the new operation at ICE would provide more direct access to Bitcoin by putting the actual tokens in the customer’s account at the end of the trade.

ICE has had conversations with other financial institutions about setting up a new operation through which banks can buy a contract, known as a swap, that will end with the customer owning Bitcoin the next day — with the backing and security of the exchange, according to the people familiar with the project.

The swap contract is more complicated than an immediate trade of dollars for Bitcoin, even if the end result is still ownership of a certain amount of Bitcoin. But a swap contract allows the trading to come under the regulation of the Commodity Futures Trading Commission and to operate clearly under existing laws — something today’s Bitcoin exchanges have struggled to do.

The chief executive of Nasdaq, Adena Friedman, recently said her company could also create a virtual-currency exchange if regulatory issues are ironed out. While several hedge funds have been buying and selling Bitcoin, most large institutional investors, such as mutual funds and pensions, have avoided it largely as a result of similar regulatory concerns.

Bitcoin still faces plenty of skepticism in the mainstream financial world. Over the weekend, Warren E. Buffett of Berkshire Hathaway, who has long been critical of virtual currencies, said Bitcoin was “probably rat poison squared” in an interview with CNBC. The Microsoft co-founder Bill Gates added his own skepticism, saying he’d “short” Bitcoin if he could.

And the new efforts to trade Bitcoin don’t help answer basic questions about what makes the virtual currency useful in the real world. Most attempts to use Bitcoin for everyday commerce haven’t gained traction, and investors have treated it as a speculative commodity like gold or silver.

Some Bitcoin enthusiasts have said that its increasing integration into the existing financial system has pulled it away from its founding ideals. Paul Chou, a former trader at Goldman Sachs who set up LedgerX, a regulated Bitcoin exchange that would compete with Intercontinental Exchange, said his company has made a point of focusing on large Bitcoin holders, rather than financial institutions.

“The reason we got into crypto was not to partner with a bank, but to replace them,” Mr. Chou said, using the shorthand for cryptocurrencies. “We deal with crypto holders directly in a way that really takes advantage of Bitcoin’s strengths, while avoiding brokers, banks and other institutions that take multiple cuts of the transaction.”

Goldman will initially only be trading futures contracts linked to Bitcoin’s price. But Goldman executives said they were looking at moving in the direction of buying and selling actual Bitcoins.

Intercontinental Exchange’s effort, if it pans out, could make Bitcoin available to a much wider and more influential customer base, including other financial firms.

Several big corporate names, including the giant technology investor SoftBank, which has stakes in Sprint and Uber, have been in discussions about being involved with the exchange in some way, the people familiar with the project said. But a spokesman for SoftBank said this week that it was no longer involved.

LedgerX, the exchange founded by Mr. Chou, is the only exchange that now offers the kind of swaps that ICE has discussed. LedgerX has experienced increasing trading volume in recent months, but ICE would start with an edge because essentially every large financial institution is already hooked into it.

The interest in Bitcoin trading illustrates how the reputation of the virtual currency has, after a rocky start, improved.

Regulators are currently looking at whether many virtual currencies, including the second most widely used digital token, Ether, have been issued and traded in violation of securities regulations. Institutional investors believe that because of the way Bitcoin was created and structured — without any one company or organization behind it — it would be on safer ground with regulators.

ICE was considering launching a swap contract linked to Ether, but backed away from that because of regulatory uncertainty, the people briefed on the effort said.

Mr. Chou, at LedgerX, said he made a similar decision and has delayed creating any products linked to Ether.

With Bitcoin, on the other hand, Mr. Chou said that road seems to be clear for big institutions to get involved.

“The industry is seeing unprecedented institutional interest for the first time in Bitcoin’s history,” he said. “I’ve been amazed that the strongest believers in cryptocurrency often start out the most skeptical. It’s a healthy skepticism. But at some point the perception shifts, and for many institutions — I think we’re finally there.”

https://www.nytimes.com/2018/05/07/technology/bitcoin-new-york-stock-exchange.html

Earlier this year, goldman sachs bought poloniex crypto exchange through an intermediary known as circle, reportedly for $400 million.

Here goldman appears to be venturing further into crypto. There are rumors (from sources vetted by nytimes journalists) claiming they are initially considering offering futures contracts for crypto similar to CBOE. Eventually go on to challenge coinbase as a platform where bitcoins can be purchased.

There are many in crypto who believed bitcoin would never have mainstream adoption or be traded as a legitimate vehicle of investment. Some could say we are witnessing early indications bitcoin will be all of that and more. Soon.

How do people see this panning out?   

Good? Bad? /Other?

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[fiulpro]

Offcourse good
But we shouldn't forget that they are only rumors thus we cannot surely gaurentee the fact that it's gonna happen.

If this continues then Bitcoins will be stabilized we still are seeing a stable value not deviating that much but for the longer run we would be able to see a stable rise .

Also the fact that he gave money to invest in something else may mean that he thinks that the Bitcoins have used up their potential this am still not sure if this news is good be converted into a reality.

Any investor will do good for Bitcoins if he keeps the greed a little bit aside

[NeuroticFish]

I am still somewhat skeptical.
While overall is good, Bitcoin is getting accepted into the big boys' game, the big boys are banks; regulations will come upon us and I am not sure our banker "friends" will help making that good.
And don't be fooled, Goldman Sachs doesn't care a all about us or Bitcoin, all they've seen there is a lot of profit.

[amishmanish]

The distinguishing bit is where other cryptos like Ether are seen as ambiguous in terms of securities law while Bitcoin seems to be in a better position. Unlike the futures contract, the article talks about actual trading of bitcoin going through big banks and exchanges.

This makes bitcoin a commodity that is available for being bought and sold at the exchange. An important thing to figure out is what this does to the utility of bitcoin. There is more decentralization but the main purpose will still only be served if BTC continues to serve as the settlement crypto for the whole cryptoverse. That seems to be the main potential utility for the time being. If and when the LN gains mainstream usage, having BTC trading on these big exchanges will be very helpful.

BTC will still be maintained and enabled by the network and not controlled by these bodies in any way, it is safe to assume that coming of NYSE or Goldman is a positive news.

[kaya11]

The distinguishing bit is where other cryptos like Ether are seen as ambiguous in terms of securities law while Bitcoin seems to be in a better position. Unlike the futures contract, the article talks about actual trading of bitcoin going through big banks and exchanges.

This makes bitcoin a commodity that is available for being bought and sold at the exchange. An important thing to figure out is what this does to the utility of bitcoin. There is more decentralization but the main purpose will still only be served if BTC continues to serve as the settlement crypto for the whole cryptoverse. That seems to be the main potential utility for the time being. If and when the LN gains mainstream usage, having BTC trading on these big exchanges will be very helpful.

BTC will still be maintained and enabled by the network and not controlled by these bodies in any way, it is safe to assume that coming of NYSE or Goldman is a positive news.

As well as there is money getting inside the crypto space, it will benefit us all, the good thing is the big boys out there will help support the market and the dominance of Bitcoin will remains, leaving out shitcoins.

[Idrisu]

The mother of manipulators want to come into cryptocurrencies? Not too bad but we should be ready for high level of price manipulations as we know how those guy do manipulate stocks price. However this is also a good news as we can find out that at list this will be an adoption.

[magneto]

The same people that previously doubted bitcoin's ability to go mainstream as an asset, and as a currency, will be the ones in the future that are trying to venture into the BTC ecosystem the quickest and make their name known. That will most likely become a trend in the future.

I agree though, I can see that these Wall Street firms most likely will only cater their services to high end, large investors, or institutional investors. It's unlikely that anything would actually be done to help BTC adoption in the masses increase.

You can't stop them though, and it has to happen sooner or later. We're currently completely speculating about the impacts of these mainstream financial firms entering BTC, especially when nothing has been done or launched yet. But at least it proves BTC's credibility, and ability to go mainstream to hesitant investors or doubters.

[Tankdestroyer]

The mother of manipulators want to come into cryptocurrencies? Not too bad but we should be ready for high level of price manipulations as we know how those guy do manipulate stocks price. However this is also a good news as we can find out that at list this will be an adoption.

Wouldn't that make markets more interesting to trade into? Let them manipulate market so long as they can, let's just try to ride the wave they will create. You are right though that this news is a significant boost in adoption rate of cryptocurrencies in general. Nevertheless, I do hope that those big players of stocks wouldn't overdo the manipulation, since it can be unhealthy for btc and crypto in the long run.

[J-N]

The mother of manipulators want to come into cryptocurrencies? Not too bad but we should be ready for high level of price manipulations as we know how those guy do manipulate stocks price. However this is also a good news as we can find out that at list this will be an adoption.

Wouldn't that make markets more interesting to trade into? Let them manipulate market so long as they can, let's just try to ride the wave they will create. You are right though that this news is a significant boost in adoption rate of cryptocurrencies in general. Nevertheless, I do hope that those big players of stocks wouldn't overdo the manipulation, since it can be unhealthy for btc and crypto in the long run.

Yes, the new money on the crypto-exchange markets can lift up the price of Bitcoin. Of course, the big institutions want to get profits and definitely they will sell their crypto-currencies later. But the ordinary investors can ride on the upstream wave too.

[Mpamaegbu]

Offcourse good
But we shouldn't forget that they are only rumors thus we cannot surely gaurentee the fact that it's gonna happen.

fiulpro, with your post two things come to mind:
1. No smoke without fire.
2. Behind every rumour there is an element of truth.

We should even begin to see this piece of news as an acceptable reality first before clouding it with doubt. Already, I think this is long overdue. It's a good thing coming from the Wall Street as a public endorsement from that quarter will quickly provide a boost to the crypto world. Kudos, Goldman.

[amishmanish]

--snip--
 It's unlikely that anything would actually be done to help BTC adoption in the masses increase.

You can't stop them though, and it has to happen sooner or later. We're currently completely speculating about the impacts of these mainstream financial firms entering BTC, especially when nothing has been done or launched yet. But at least it proves BTC's credibility, and ability to go mainstream to hesitant investors or doubters.

BTC adoption by masses will now depend mainly on the success of LN. Even if people don't use it  so much in the beginning, the ability to prove capacity with layer-2 solutions can be the next major milestone for bitcoin.

Right now far too many big names are hogging the limelight in terms of adoption and we don't see much momentum in the smaller spaces. Activity related to merchant adoption and such would be much more welcome than these uncertain announcements from the bigwigs. Their intentions are little else than ensuring that the rich clientele doesn't miss the bus.

[Harlot]

The chief executive of Nasdaq, Adena Friedman, recently said her company could also create a virtual-currency exchange if regulatory issues are ironed out. While several hedge funds have been buying and selling Bitcoin, most large institutional investors, such as mutual funds and pensions, have avoided it largely as a result of similar regulatory concerns.

I am more concerned on this part of the news, opening up an exchange which is run by NASDAQ is pretty big in terms of competition in the market, legally speaking other exchanges that even come first before this one might lose a lot of customers as this one will be licensed and approved by the government. The government of the U.S.A might even make the NASDAQ operated exchange be the official exchange of their country, which means that they will eliminate existing exchanges, and that possibility is a strong one as they will see that it will be easier to control one exchange compared to a dozen exchanges each operating individually.

[Jonsnowstark]

I think this would be good for bitcoin. Big investors are gonna come crawling asking for a big buy. For the parent company of New York Stock Exchange, it will also be beneficial. Since the emergence of bitcoin, people, instead of buying stocks, would buy bitcoin instead. Many people are putting in a whole lot in bitcoin. They see a very good business in crypto that's why they would enter into the cryptoworld.

[audaciousbeing]

I wont say its all good and totally bad because its a mixture of both when looked into analytically beyond the obvious of the advantages the article is trying to pass across.

On the good side of course, its going to boost credibility, bring in more money into the crypto industry and thereby increase the price of bitcoin and crypto currencies along the line which is something an average crypto enthusiast wants as a return on their investments in terms of money and time in the industry.

However, the bad side is going to be serious because, its a known fact that the industry is largely unregulated and the attention its getting is because the amount in the industry is not enough to distort the fiat financial system. With the coming of this large banks and their counterparts across the world means huge money is coming in which will lead to that aggressive regulation that might defeat the very essence of decentralization. Another fear is how they might monopolise the entire market just by single introduction of capital into the market.

[Beerwizzard]

Bitcoin Sees Wall Street Warm to Trading Virtual Currency

Just imho but wall street always was worm to any kind of speculations, especially cryptocurrencies. Sometimes you can find really weird ETFs (like SPDR SSGA Gender Diversity ETF on NYSE) that are hardly connected to something usefull. I don't think that someone of the wall street speculators care about the nature of bitcoin either.

I am still somewhat skeptical.
While overall is good, Bitcoin is getting accepted into the big boys' game, the big boys are banks; regulations will come upon us and I am not sure our banker "friends" will help making that good.
And don't be fooled, Goldman Sachs doesn't care a all about us or Bitcoin, all they've seen there is a lot of profit.

After becoming a really established financial instrument everything we need is a volume from banks and whales. We need the daily volume of bitcoin to be somehow close to the volume of good forex trading pairs. At that point none of the whales will be able to dump the price.
Just imagine some european bank tryin to get rid of all its euros. With such a big volume it won't have any affect on the price.

[2fresh]

Very good, I'm not getting my hopes up yet though.
Although I have some believe in it since we recently also had rumors about btc trading on wall street, and now the nasdaq. I want to believe 

[timerland]

It was a matter of time before the mainstream starts to notice crypto. Buying out exchanges through intermediaries and the like are all going to be very common practice in the future for these mainstream financial firms, just as Goldman Sachs did with Poloniex.

The institutional demand and interest of BTC is definitely going to continue to rise in future years. Whenever there is news of a mainstream financial institutional entering the BTC market, it will shake up the crypto markets for sure. Although I'm very skeptical of the impacts of these instutional firms launching exchanges on the actual bitcoin users, since they are most likely going to be targeted for big time speculators only.

Hopefully these institutions don't trade or issue contracts associated with BTC price, but rather bitcoin itself. That is the main concern that I have.

[Lagrood]

Currently I consider that crypto coins are more value for short and medium time investments comparing with gold. Surely for long time investments gold is a favorite but now now gold is in stagnation and even can drop a little so crypto coins are very attractive for speculating and investing. I think that is why there are much negative information which is need to mislead people and not to give them a chance to earn with a new upward trend.

[Arabella.Theo]

SAN FRANCISCO — Some of the biggest names on Wall Street are warming up to Bitcoin, a virtual currency that for nearly a decade has been consigned to the unregulated fringes of the financial world.

The parent company of the New York Stock Exchange has been working on an online trading platform that would allow large investors to buy and hold Bitcoin, according to emails and documents viewed by The New York Times and four people briefed on the effort who asked to remain anonymous because the plans were still confidential.

The news of the virtual exchange, which has not been reported before, came after Goldman Sachs went public with its intention to open a Bitcoin trading unit — most likely the first of its kind at a Wall Street bank.

The moves by Goldman and Intercontinental Exchange, or ICE, the parent company of the New York Stock Exchange, mark a dramatic shift toward the mainstream for a digital token that has been known primarily for its underworld associations and status as a high-risk, speculative investment.

The new interest among Wall Street power brokers also represents a surprising new chapter in the renegade history of Bitcoin.

The virtual currency was created after the 2008 global financial crisis by a still-anonymous programmer who used the name Satoshi Nakamoto. The idea was to replace the existing banking structure with an online alternative that couldn’t be controlled by a handful of powerful organizations.

But instead of being replaced, the old banks are beginning to assert their own role in the unorthodox financial world of virtual currency, sometimes called cryptocurrencies.

While Bitcoin was originally intended to be used by consumers for all sorts of transactions — without any financial institutions getting involved — it has mostly become a virtual investment, stored in digital wallets and traded on mostly unregulated exchanges around the world. People buy Bitcoin in the hope that its value will go up, similar to the way they purchase gold or silver.

Details of the platform that Intercontinental Exchange is working on have not been finalized and the project could still fall apart, given the hesitancy among big Wall Street institutions to be closely associated with the Wild West of virtual currencies. A spokesman said that the company had no comment.

Many corporations and governments have expressed interest in the technology that Bitcoin introduced, particularly a form of database known as the blockchain.

Some large financial exchanges, including the Chicago Mercantile Exchange, have already created financial products linked to the price of Bitcoin, known as futures. But the new operation at ICE would provide more direct access to Bitcoin by putting the actual tokens in the customer’s account at the end of the trade.

ICE has had conversations with other financial institutions about setting up a new operation through which banks can buy a contract, known as a swap, that will end with the customer owning Bitcoin the next day — with the backing and security of the exchange, according to the people familiar with the project.

The swap contract is more complicated than an immediate trade of dollars for Bitcoin, even if the end result is still ownership of a certain amount of Bitcoin. But a swap contract allows the trading to come under the regulation of the Commodity Futures Trading Commission and to operate clearly under existing laws — something today’s Bitcoin exchanges have struggled to do.

The chief executive of Nasdaq, Adena Friedman, recently said her company could also create a virtual-currency exchange if regulatory issues are ironed out. While several hedge funds have been buying and selling Bitcoin, most large institutional investors, such as mutual funds and pensions, have avoided it largely as a result of similar regulatory concerns.

Bitcoin still faces plenty of skepticism in the mainstream financial world. Over the weekend, Warren E. Buffett of Berkshire Hathaway, who has long been critical of virtual currencies, said Bitcoin was “probably rat poison squared” in an interview with CNBC. The Microsoft co-founder Bill Gates added his own skepticism, saying he’d “short” Bitcoin if he could.

And the new efforts to trade Bitcoin don’t help answer basic questions about what makes the virtual currency useful in the real world. Most attempts to use Bitcoin for everyday commerce haven’t gained traction, and investors have treated it as a speculative commodity like gold or silver.

Some Bitcoin enthusiasts have said that its increasing integration into the existing financial system has pulled it away from its founding ideals. Paul Chou, a former trader at Goldman Sachs who set up LedgerX, a regulated Bitcoin exchange that would compete with Intercontinental Exchange, said his company has made a point of focusing on large Bitcoin holders, rather than financial institutions.

“The reason we got into crypto was not to partner with a bank, but to replace them,” Mr. Chou said, using the shorthand for cryptocurrencies. “We deal with crypto holders directly in a way that really takes advantage of Bitcoin’s strengths, while avoiding brokers, banks and other institutions that take multiple cuts of the transaction.”

Goldman will initially only be trading futures contracts linked to Bitcoin’s price. But Goldman executives said they were looking at moving in the direction of buying and selling actual Bitcoins.

Intercontinental Exchange’s effort, if it pans out, could make Bitcoin available to a much wider and more influential customer base, including other financial firms.

Several big corporate names, including the giant technology investor SoftBank, which has stakes in Sprint and Uber, have been in discussions about being involved with the exchange in some way, the people familiar with the project said. But a spokesman for SoftBank said this week that it was no longer involved.

LedgerX, the exchange founded by Mr. Chou, is the only exchange that now offers the kind of swaps that ICE has discussed. LedgerX has experienced increasing trading volume in recent months, but ICE would start with an edge because essentially every large financial institution is already hooked into it.

The interest in Bitcoin trading illustrates how the reputation of the virtual currency has, after a rocky start, improved.

Regulators are currently looking at whether many virtual currencies, including the second most widely used digital token, Ether, have been issued and traded in violation of securities regulations. Institutional investors believe that because of the way Bitcoin was created and structured — without any one company or organization behind it — it would be on safer ground with regulators.

ICE was considering launching a swap contract linked to Ether, but backed away from that because of regulatory uncertainty, the people briefed on the effort said.

Mr. Chou, at LedgerX, said he made a similar decision and has delayed creating any products linked to Ether.

With Bitcoin, on the other hand, Mr. Chou said that road seems to be clear for big institutions to get involved.

“The industry is seeing unprecedented institutional interest for the first time in Bitcoin’s history,” he said. “I’ve been amazed that the strongest believers in cryptocurrency often start out the most skeptical. It’s a healthy skepticism. But at some point the perception shifts, and for many institutions — I think we’re finally there.”

https://www.nytimes.com/2018/05/07/technology/bitcoin-new-york-stock-exchange.html

Earlier this year, goldman sachs bought poloniex crypto exchange through an intermediary known as circle, reportedly for $400 million.

Here goldman appears to be venturing further into crypto. There are rumors (from sources vetted by nytimes journalists) claiming they are initially considering offering futures contracts for crypto similar to CBOE. Eventually go on to challenge coinbase as a platform where bitcoins can be purchased.

There are many in crypto who believed bitcoin would never have mainstream adoption or be traded as a legitimate vehicle of investment. Some could say we are witnessing early indications bitcoin will be all of that and more. Soon.

How do people see this panning out?   

Good? Bad? /Other?

I think the feeling is positive but I have a suspicion that this is only to hedge themselves against possibly missing out on further gains. I don't think they genuinely believe in the technology nor want it to succeed. Binance releasing their quarterly returns has just pilled a head of pressure on them

[HoardApp]

This type of movement is inevitable. Everyday that passes we'll see more news just like this. Definitely interested to see what the rest of the year has in store as far as institutional involvement.