Bloomberg, quoting an insider familiar with the developments, has reported that Morgan Stanley is building a proprietary derivatives asset that will offer traders “synthetic exposure” to the valuation of Bitcoin.
The Bloomberg report states
“The U.S. bank will deal in contracts that give investors synthetic exposure to the performance of Bitcoin, said the person, who asked not to be identified because the information is private. Investors will be able to go long or short using the so-called price return swaps, and Morgan Stanley will charge a spread for each transaction.”
The report also disclosed that Morgan Stanley is “technically prepared” to start offering Bitcoin swaps, following in-house clearance and request from institutional investors. It can be remembered that James Gorman, CEO of Morgan Stanley, has previously stated that the firm won’t facilitate direct trading of Bitcoin by its clients.
Recently, the sixth-largest bank by assets successfully lured Andrew Peel, a noted crypto expert, from Credit Suisse to lead its crypto business.
Morgan Stanley joins a long list of Wall Street investment banking giants which are presently exploring the possibility of capitalizing on the crypto adoption across the globe. Notably, the fourth and fifth largest US banks by assets, Goldman Sachs and Citigroup, is working to launch Bitcoin derivative product. Similarly, JP Morgan is also study the opportunities that exist in the crypto sphere, despite its CEO Jamie Dimon being one of the cryptocurrency’s vocal critics.
Furthermore, Intercontinental Exchange (ICE), which owns and operates NYSE, is planning to launch the first ever physically-settled Bitcoin futures product. This means, contracts will be settled using Bitcoin, instead of cash as in the case of CBOE and CME.