Traders at banks fear missing out on the crypto party – Californianewstimes.com

Banks have cryptocurrency issues. Insider trading desks and a wide range of clients are pressing senior executives at large banks to launch cryptocurrency services.

Compliance departments and boards are less enthusiastic, but there is a growing desire to do something to avoid being left behind. It is not clear what to do and how to do it.

The rise of companies built around Bitcoin and other digital assets can make dealers look like Wall Street executives are anxious to look at the hackathon.

And, apart from the potential danger of dragging a good crypto name into the mud at some point, banks face very real challenges in their digital efforts. They cant move fast. You need to comply with regulations that are currently unclear or have not yet been enforced. Finding and maintaining talent is becoming increasingly difficult. And what if it all turns out to be a big scam?

Despite the potential challenges, big banks can no longer shrug digital coins. The market has grown to a scale of $ 1.8 trillion.

The world of digital assets is too big to ignore. We believe that crypto-based digital assets have the potential to form a whole new asset class, said Bank of America, the first research dedicated to crypto. It is stated in the note.

Several major US banks have announced their involvement in or planned ventures in the digital market, but many European dealers have quietly followed suit.

Some, like Goldman Sachs, have chosen to make a splash with the effort around cryptography. Intentionally create a lot of noise about that babys steps. European banks are more tortured and, as a result, messaging is mixed.

In February, a research team at Commerzbank, a German lender, sent a note explaining why analysts do not cover Bitcoin. . By September, the lender had set up a digital asset team.

Its hard to decide where the traditional financial giant fits in the crypto world. A complex, highly technology-driven process of preserving digital assets, custody is risky and extremely difficult to insure.

Currently, banks can only buy and sell futures and other non-cash contracts, and transactions are similarly suspicious, making it difficult to generate the returns that crypto-speaking trading companies can. Rental is off-limits for now. And companies operating in the digital asset market are never afraid.

Cryptography is expanding into The traditional financial services market, said David Kinitsky, CEO of Kraken Bank. Companies [native to crypto] It will beat the existing companies in this new media, as seen in other industries when the Internet was introduced.

Part of the problem is that everything related to cryptography is related to cutting-edge technology far from the kind of kits that traditional financial advocates are usually associated with. After years of consolidation and mergers, the technology underlying the banking giant is awkward, fragmented, and often esoteric.

Banks arent really advances in technology, said Diogo Monica, co-founder of banks and cryptocurrency technology provider Anchorage Digital.

Banks arent as cool as they used to be, so talent is also an issue. Investment banks are looking for retired coders to run esoteric and intertwined computer systems because young people are no longer learning the language needed to run some of Wall Streets largest institutions. Recruiters say they are forced to do so.

Banks definitely have problems, said a financial market expert recruiter, saying young coders are enjoying better wages and more flexibility in companies focused on cryptocurrencies and technology. I did. And in many cases, the job is simply more interesting.

However, not everything is lost. Reputation and the significant customer base they already have are valuable, especially when more conservative investors such as insurance companies are involved. Lending and borrowing may also be opened in the future.

Christine Trent Parker, a partner in the financial industry group at law firm Reed Smith, said: And if their technology doesnt support it, banks can buy it at any time.

eva.szalay@ft.com

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Traders at banks fear missing out on the crypto party - Californianewstimes.com