Betting on bitcoin and other virtual currencies is risky, legally uncertain, but potentially very lucrative. Faced with this dilemma, the Wall Street giants advance between enthusiasm and skepticism.
The president of the largest US bank, JPMorgan Chase, has a clear vision on the matter.
“If you ask me for my advice, I would tell you not to come near,” Jamie Dimon said in late May during a parliamentary hearing.
But “it is not my role to tell people how to spend their money,” he added. His bank is currently studying how to help his clients enter the crypto field.
Driven during the pandemic by some small investors with time and money, virtual currencies exploded in 2020 and early 2021.
Banks, brokers and investment firms are now looking to satisfy some clients who feel they have missed an opportunity.
Traditional portfolio manager State Street announced on Thursday the creation of a division dedicated to digital assets.
On Wednesday, the president of online brokerage house Interactive Brokers stated that his clients will be able to exchange cryptocurrencies on his site by the end of the summer.
Robinhood
Like its competitors Charles Schwab and Fidelity, Interactive does not currently allow the acquisition of virtual currencies such as bitcoin and ethereum, but offers financial products linked to these values that prevent the investor from having them directly in their portfolio.
On the other hand, the Robinhood application or the Coinbase platform allow you to buy them.
The firm ForUsAll, which manages retirement funds of some 70,000 employees, last Monday made an agreement with Coinbase to allow its clients to include 5% of cryptocurrencies in their funds.
Business bank Morgan Stanley indicated in March that it will allow its wealthiest clients to invest in Bitcoin funds. And Goldman Sachs recently launched a team dedicated to cryptocurrency brokerage.
Fidelity Investment, one of the largest asset managers in the world, offers since 2018 brokerage and deposit services for these assets reserved for large investors such as hedge funds and is preparing to launch new products associated with bitcoin.
This type of product could facilitate the access of individuals to invest in cryptocurrencies.
Despite a progressive opening, these types of assets are still risky.
Hackers
The regulations are not clear and thefts by hackers are frequent. Above all, its volatility is enormous: bitcoin went from about $ 30,000 at the beginning of the year, to $ 63,000 in mid-April, to settle at $ 34,000 at the beginning of June.
“Speculators and those who fear missing out on a good opportunity will continue to turn to cryptocurrencies hoping to make a lot of money,” said Ian Gendler of consultancy Value Line.
This specialist discourages his clients from investing in crypto due to the too high risks and the impossibility of estimating its value: unlike a company or a commodity, cryptocurrencies are not backed by any tangible asset, and unlike currencies, they are not guaranteed by a government.
Cryptocurrencies “are worth what the next investor is willing to pay,” defined Gendler.
For Chris Kuiper of the CFRA consultancy, these types of emerging assets are here to stay. Its use will grow “as the legal and regulatory framework builds,” he predicted.
