Beating Goldman Sachs and Nasdaq to the Punch
(CCN) -- On May 3, CCN reported that Goldman Sachs is entering the bitcoin market by launching a futures market targeted at investors in the traditional finance sector and stock market. At the time, Goldman Sachs executive Rana Yared stated that despite the personal skepticisms of the bank’s executives, Goldman Sachs decided to operate a bitcoin trading desk to facilitate growing demand from its clients and investors.
On May 8, less than a week after the plans of Goldman Sachs to operate a bitcoin futures market were revealed to the public, NYTimes reported that several emails and documents reviewed by the NYTimes team showed the parent company of NYSE has been developing an online bitcoin trading platform.
“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 New York Times reported.
Just weeks ago, the chief executive of Nasdaq, the world’s second-largest stock exchange after the NYSE, revealed that the exchange would be open to trading cryptocurrencies in a regulated environment.
Nasdaq has also hinted at becoming a crypto brokerage, in a regulated space.
Goldman Sachs, CME, CBOE, and other major financial institutions that either already have integrated bitcoin or are planning to serve the bitcoin market in the future are operating or developing a futures market based on bitcoin, but are not directly dealing with bitcoin. Essentially, Goldman Sachs will allow its clients to hold contracts that mimic the value of bitcoin but they will not be able to own bitcoin or the actual currency.
NYSE and its parent company is currently developing a proper bitcoin exchange on which investors can buy and sell the dominant cryptocurrency directly, without the involvement of futures, derivatives, and other types of contracts. NYSE clients and investors will be able to directly buy, sell, and hold bitcoin, possibly in a wallet, similar to Coinbase or other existing cryptocurrency platforms.
Coinbase Custody, Bithumb’s offline exchange, and other services of major cryptocurrency exchanges already allow large-scale institutional and retail investors to invest in cryptocurrencies like bitcoin directly, in large sums. Coinbase Custody for instance only accepts bids larger than $15 million. Hence, investors will not necessarily gain any advantage or merit over other exchanges by using the bitcoin exchange of NYSE.
But, the launch of the NYSE bitcoin exchange is monumental and symbolic, as it demonstrates that even the largest stock market in the world which settles trillions of dollars on a regular basis can no longer dismiss the cryptocurrency market, which is growing at an exponential rate.
In an interview with NYTimes, LedgerX founder and CEO Paul Chou, who previously worked at Goldman Sachs as an executive, said that the bitcoin industry is seeing unprecedented institutional interest for the first time in history.
“The industry is seeing unprecedented institutional interest for the first time in Bitcoin’s history. 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.”