Another one of the world’s biggest investment banks is developing a cryptocurrency product.
Morgan Stanley offers Synthetic Exposure
Morgan Stanley is creating a derivatives product that will give traders “synthetic exposure” to the price of Bitcoin.
“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,” reports Bloomberg.
Morgan Stanley now joins a growing list of banks looking to offer clients crypto options.
Goldman Sachs Offerings
Goldman is looking into a custody product.
It would hold the securities on behalf of the funds. That would help cut the risk for clients worried about potential loss. Should that happen, the bank could provide quite a boost to the number of funds betting on virtual currency.
It also has plans to create a Bitcoin derivatives product that functions similarly to the cash-settled cryptocurrency futures contract.
“The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they’re settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges,” he said, as quoted by CCN.
According to Business Insider:
“Citi has developed an instrument it’s calling a Digital Asset Receipt or DAR. It works much like an American Depository Receipt or ADR, which has been around for decades to give US investors a way to own foreign stocks that don’t otherwise trade on US exchanges.”
If this gives institutional and wealthy investors a new solution to buy in, it could help accelerate cryptocurrency adoption quicker than hoped.
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