INSUBCONTINENT EXCLUSIVE:
SAN FRANCISCO: Some of the biggest names on Wall Street are warming up to bitcoin, a virtual currency that for nearly a decade has been
consigned to the unregulated fringes of the financial world.
The parent company of the New York Stock Exchange has been working on an online
trading platform that would allow large investors to buy and hold bitcoin, according to emails and documents viewed by The New York Times
and four people briefed on the effort who asked to remain anonymous because the plans were still confidential.
The news of the virtual
likely the first of its kind at a Wall Street bank.
The moves by Goldman and the Intercontinental Exchange, or ICE, the parent company of
the New York Stock Exchange, mark a dramatic shift toward the mainstream for a digital token that has been known primarily for its
underworld associations and status as a high-risk, speculative investment.
The new interest among Wall Street power brokers also represents
a surprising new chapter in the renegade history of bitcoin.
The virtual currency was created after the 2008 global financial crisis by a
still-anonymous programmer who used the name Satoshi Nakamoto
organizations.
But instead of being replaced, the old banks are beginning to assert their own role in the unorthodox financial world of
virtual currency, sometimes called cryptocurrencies.
While bitcoin was originally designed to be used by consumers for all sorts of
and traded on mostly unregulated exchanges around the world
People buy bitcoin in the hope that its value will go up, similar to the way they purchase gold or silver.
Details of the platform that the
Intercontinental Exchange is working on have not been finalized and the project could still fall apart, given the hesitancy among big Wall
Street institutions to be closely associated with the Wild West of virtual currencies
A spokesman said that the company had no comment.
Many corporations and governments have expressed interest in the technology that bitcoin
introduced, particularly a form of database known as the blockchain.
Some large financial exchanges, including the Chicago Mercantile
Exchange, have already created financial products linked to the price of bitcoin, known as futures
of the trade.
ICE has had conversations with other financial institutions about setting up a new operation through which banks can buy a
according to the people familiar with the project.
The swap contract is more complicated than an immediate trade of dollars for bitcoin,
even if the end result is still ownership of a certain amount of bitcoin
But a swap contract allows the trading to come under the regulation of the Commodity Futures Trading Commission and to operate clearly under
company could also create a virtual-currency exchange if regulatory issues are ironed out
While several hedge funds have been buying and selling bitcoin, most large institutional investors, such as mutual funds and pensions, have
avoided it largely as a result of similar regulatory concerns.
Bitcoin still faces plenty of skepticism in the mainstream financial world
gold or silver.
Some bitcoin enthusiasts have said that its increasing integration into the existing financial system has pulled it away
Paul Chou, a former trader at Goldman Sachs who set up LedgerX, a regulated bitcoin exchange that would compete with the Intercontinental
But Goldman executives said they were looking at moving in the direction of buying and selling actual bitcoins.
The Intercontinental
financial firms.
Several big corporate names, including the giant technology investor SoftBank, which has stakes in Sprint and Uber, have
been in discussions about being involved with the exchange in some way, the people familiar with the project said
But a spokesman for SoftBank said this week that it was no longer involved.
LedgerX, the exchange founded by Chou, is the only exchange that
now offers the kind of swaps that ICE has discussed
LedgerX has experienced increasing trading volume in recent months, but ICE would start with an edge because essentially every large
financial institutions is already hooked into it.
The interest in bitcoin trading illustrates how the reputation of the virtual currency
has, after a rocky start, improved.
Regulators are looking at whether many virtual currencies, including the second-most widely used digital
token, Ether, have been issued and traded in violation of securities regulations
because of regulatory uncertainty, the people briefed on the effort said.
Chou, at LedgerX, said he made a similar decision and has delayed
creating any products linked to Ether.
With bitcoin, on the other hand, Chou said that road seems to be clear for big institutions to get
