- The latest financial juggernaut to throw its hat in the ring has been Jefferies Financial Group, which is expanding banking services for cryptocurrency clients.
- These moves by Wall Street’s financial heavyweights underscore just how far some of the world’s most staid financial institutions have come in accepting and even going so far as to embrace cryptocurrencies.
If you can’t beat them, join them.
At least that’s what appears to be happening for a slew of some of the biggest names on Wall Street who had previously derided cryptocurrencies as anything from a mere “puff” to an outright “fraud.”
The latest financial juggernaut to throw its hat in the ring has been Jefferies Financial Group, which is expanding banking services for cryptocurrency clients and perhaps inspired by the performance of Silvergate Capital, the long-trusted bank of many cryptocurrency firms.
In a quarter which saw profits at major Wall Street banks plunge, on a sharp decline in fees from dealmaking and capital-raising, Silvergate Capital’s bank was the standout performer by servicing the rapidly growing cryptocurrency industry.
Jefferies is hardly alone in ratcheting up cryptocurrency activity, with the world’s largest asset manager BlackRock (+1.24%) now backing a stablecoin issuer and Goldman Sachs which had previously opened and closed its cryptocurrency trading desk, now doubling down on trading digital assets.
These moves by Wall Street’s financial heavyweights underscore just how far some of the world’s most staid financial institutions have come in accepting and even going so far as to embrace cryptocurrencies.
For years, some of Wall Street’s most high profile executive have derided cryptocurrencies, with JPMorgan Chase CEO Jamie Dimon once calling it a “fraud” until the lure of lucre meant that firms who turned a nose at the nascent asset class were missing out on the flood of investor money chasing it.
But even as Wall Street’s finest chase after the digital dollar, regulatory uncertainty and internal compliance cloud expansion plans, with many firms having to either create distinct legal entities to hive off should things go pear-shaped or limit their participation.
While institutional trading volume is increasing – US$1.14 trillion worth of cryptocurrencies were traded on Coinbase Global (+0.11%) in 2021 – it still remains a drop in the ocean compared with traditional assets – US$4-$12 trillion of derivatives are traded in a single day.
And while some large banks are trading cryptocurrency derivatives, none of them is trading cryptocurrency itself.