The crypto space is hot property at the moment even in the wake of recent market slumps. More institutionalized finance exchanges and organizations are looking to provide a wider range of products for their clients and these must now include Bitcoin futures. The latest to join the blockchain train is Morgan Stanley.
As the first Bitcoin futures contracts expired and were settled this week, the CBoE hailed them a success and a victory for those bearish on Bitcoin. Morgan Stanley has joined its rivals Goldman Sachs and will begin clearing Bitcoin contracts for its clients according to Business Insider.
The bank’s chief financial officer, Jonathan Pruzan, said the firm has been clearing Bitcoin futures trades made on CBoE and CME Group. He told Bloomberg in a recent interview:
If someone wants to do a trade on the futures and settle in cash, we’ll do that. I wouldn’t say it’s been a lot of activity, but it’s for core institutional clients who want to participate in a derivatives transaction.
Due to its nerve-wracking volatility, many of Wall Street’s major banks have been holding off clearing crypto contracts and taking a wait and see approach. According to Bloomberg the only other bank offering to clear them at the moment is Goldman Sachs which demanded that clients set aside funds equal to the full value of their Bitcoin futures trade as a condition for clearing the transaction. This may have deterred many of them from entering such highly leveraged contracts.
It is likely that Morgan Stanley will also require some margin level, however, Pruzan declined to say how much this would be.
Other large brokerages, including TD Ameritrade, E*Trade, and Interactive Brokers, are also allowing their clients to trade Bitcoin futures through their platforms. However, in the wake of the 40% market slide in the past two weeks, many could be holding off until the volatility settles. The second two month contract from CBoE, XBT G8, is set to expire on February 14 and many could be waiting to see what happens then.
Volatility is part of the crypto scene at the moment and this makes it attractive to high risk investors but not so much for those that would rather leave their money in a bank.
This article was first published by James Levenson at Bitcoinist