crypto asset

Bitcoin Is an Institutional Asset Class, Says Morgan Stanley

A new report released by the global bank giant Morgan Stanley has reported that Bitcoin and other cryptocurrencies are witnessing more involvement by institutional investors, while the number of retail investors has stayed the same. The report titled ‘Bitcoin Decrypted: A Brief Teach-In and Implications’ was updated by the American multinational investment bank on October 31 with numbers on the last 6 months in the world of cryptocurrencies.

Some of the notable trends in the report include the phenomenon of ‘rapidly morphing thesis’. It began with terming Bitcoin as Digital Cash, and the answer to the issues that currently prevail in the traditional financial systems. The report stated that Bitcoin will metamorphosize into a new institutional asset class once it is successfully adapted into the society as a payment system.

Discovery of issues pertaining to the Bitcoin system as well as its evolution have caused the thesis to evolve. These include number of hacks, hard forks, volatility in the market, and the emergence of new technologies less costlier than Bitcoin.

Morgan Stanley’s current theory is that Bitcoin is an institutional investment asset, and that it has been the case for over an year now. The report further highlighted that since January 2016 the amount of cryptocurrencies under management has continually increased. Presently, crypto assets worth as much as USD 7.11 billion  are being managed by hedge funds, private equity as well as venture capital firms.

The thesis put forth by Morgan Stanley’s research arm is supported by the fact that some of the biggest financial institutions in the world are getting involved in the crypto market. It is supported by instances such as Coinbase’s fundraising round, Fidelity’s crypto services division, etc. The report also mentioned that the primary issue faced by financial institutions when it comes to investing in crypto is the lack of regulatory certainty.