Wall Street has slowly but surely accepted bitcoin as a mainstream investment.
Goldman Sachs CFO Martin Chavez said the bank is working on a bitcoin derivative known as a “non-deliverable forward,” because of demand from clients. The bank’s now former CEO Lloyd Blankfein tweeted in October that Goldman was “still thinking about bitcoin” and that the bank was “not endorsing/rejecting.” Goldman Sachs has been clearing bitcoin-linked futures contracts offered by the CBOE and CME since May and is providing clients liquidity for those futures.
As for physical bitcoin, Goldman is not quite there yet. Its CFO underlined the need for a safe custody solution before the bank could move forward. Since those comments, though, Fidelity has stepped in to fill that void. It announced a custody solution, and New York regulators approved Coinbase’s own custody solution last week.
The new industry has seen more and more collaboration between Wall Street and native cryptocurrency companies themselves. Seventy-two-year-old Fidelity, which thanks to its crypto-friendly CEO has been an early leader in the space, teamed with Coinbase so customers could see their crypto balances.
Nasdaq announced a collaboration with cryptocurrency exchange Gemini, founded by the Winklevosses. The deal gave Gemini access to Nasdaq’s surveillance technology to help provide a fair and “rules-based marketplace” for their own participants. Nasdaq CEO Adena Friedman said earlier this year the company was “open to becoming a crypto exchange.” She told CNBC in April that once the space “matures,” Nasdaq would consider becoming a digital-currency exchange — but for now, she says, it is more comfortable acting as a partner.
Perhaps the biggest vote of confidence has been from notoriously careful institutional investors.
Yale’s endowment CIO David Swensen has invested in at least two venture capital funds that deal in blockchain and cryptocurrency. While it’s not clear that those investments are in bitcoin itself, the reports were seen as a bullish sign for the industry’s future.
Despite the recent interest, the SEC has yet to approve a bitcoin ETF. The agency published a letter in January pointing to “significant investor protection issues that need to be examined” before sponsors can offer these funds to retail investors.
Those investors had been awaiting the approval of an ETF this summer, momentarily pushing prices above $8,000. But regulators have repeatedly held off, citing investor protection and potential for fraud or manipulation in the markets. In July, the Securities and Exchange Commission rejected a second attempt by the Winklevosses to list shares of what would be the first-ever bitcoin ETF.