November 27, 2018 / 9:29 PM / 7 months ago

Breakingviews - Crypto disruptors want a hug from Wall St

Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 13, 2018. REUTERS/Dado Ruvic/Illustration

NEW YORK (Reuters Breakingviews) - “Do you have a state ID?” That’s the first question you hear when picking up credentials to enter Consensus: Invest, a cryptocurrency conference where the sector’s libertarian, anti-establishment ethos used to reign. After an 80 percent collapse in the price of bitcoin over the past year, digital currency enthusiasts are rethinking old assumptions and looking for support wherever they can find it.

Jeffrey Sprecher is a good example. The chief executive of NYSE owner Intercontinental Exchange kicked off the event on Tuesday by touting the company’s planned January launch of a bitcoin futures trading platform called Bakkt. Having a regulated exchange provide a futures contract with institutional-grade custody arrangements could attract mainstream investors and perhaps tame some of the wild volatility of cryptocurrencies.

NYSE is about as establishment as it gets, which is sort of the point. Sprecher proudly extolled ICE’s anti-money laundering and tax reporting capabilities, saying they would bring useful light into a sector with much obscurity. Powerful miners and coin holders can suddenly trigger actions like last month’s fork of bitcoin cash into two rival currencies. “The decisions are being made by influential, rich oligarchs,” he said.

Fidelity Investments is another old-world name getting in on the act, via the provision of custody services for endowments and other institutions wishing to own cryptocurrencies, tentatively due to be launched next year. Justin Schmidt, head of digital asset markets at Goldman Sachs, pointed out that without custody of the kind that is commonplace for stocks and bonds, institutions can’t go near bitcoin and its ilk as an investment.

These efforts can’t come to fruition soon enough for many crypto backers shaken by this year’s plunge in prices. The Securities and Exchange Commission has rejected several bitcoin exchange-traded funds. Van Eck Associates’ Gabor Gurbacs explained that the firm is still trying to gain approval for an ETF. But some attendees said the currency’s volatility could make the agency even more reticent.

As Josh Brown of Ritholtz Wealth Management exclaimed at one session, “WTF? I was here last year and we were all rich.” He predicted SEC approval of an ETF could cause bitcoin’s price to triple almost overnight. Many in the crowd agreed, if only because it’s hard to imagine what else could spark a turnaround.


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