Wall Street Firms To Take On Binance, Coinbase, Other Crypto-Native Exchanges (cryptoslate.com) 20
An anonymous reader quotes a report from CryptoSlate: Traditional financial firms, including Standard Chartered, Nomura, and Charles Schwab, are busy building or funding new crypto exchange and custody platforms, FT reported on May 31. These well-known Wall Street firms are betting that fund managers are still interested in trading crypto even after last year's market downturn and the string of crypto scandals. The FTX bankruptcy and Terra ecosystem implosion, among others, highlighted the risk of investing through largely unregulated exchanges. But legacy firms believe asset managers prefer dealing with established players over crypto-native exchanges like Binance.
Gautam Chhugani, Senior Analyst of Global Digital Assets at Bernstein, told FT: "The large, pedigreed, traditional institutional investors definitely prefer dealing with counterparties who they know have been in existence for years and have been regulated in the traditional sense." In a survey of 250 asset managers published by EY-Parthenon earlier this month, half of the respondents said they would consider switching from a crypto-native group to a traditional-backed company if they offered the same services. Additionally, 90% of respondents trusted traditional financial groups to act as custodians for their crypto assets.
The collapse of crypto firms last year and the disclosures on alleged malpractices eroded the trust of crypto investors. Traditional financial firms are banking on their finance industry expertise, long-standing reputations, and lack of regulatory scrutiny to attract clients. The new wave of legacy-backed crypto platforms will compete with Coinbase and Binance, which also host institutional clients. But traditional finance firms will compete by building more transparent operations -- particularly in separating exchanges from asset custody to avoid conflict of interest and reduce risk. The report notes that BNY Mellon and Fidelity already operate separate crypto custody divisions. Meanwhile, the Nasdaq is waiting for regulators to greenlight its service.
Gautam Chhugani, Senior Analyst of Global Digital Assets at Bernstein, told FT: "The large, pedigreed, traditional institutional investors definitely prefer dealing with counterparties who they know have been in existence for years and have been regulated in the traditional sense." In a survey of 250 asset managers published by EY-Parthenon earlier this month, half of the respondents said they would consider switching from a crypto-native group to a traditional-backed company if they offered the same services. Additionally, 90% of respondents trusted traditional financial groups to act as custodians for their crypto assets.
The collapse of crypto firms last year and the disclosures on alleged malpractices eroded the trust of crypto investors. Traditional financial firms are banking on their finance industry expertise, long-standing reputations, and lack of regulatory scrutiny to attract clients. The new wave of legacy-backed crypto platforms will compete with Coinbase and Binance, which also host institutional clients. But traditional finance firms will compete by building more transparent operations -- particularly in separating exchanges from asset custody to avoid conflict of interest and reduce risk. The report notes that BNY Mellon and Fidelity already operate separate crypto custody divisions. Meanwhile, the Nasdaq is waiting for regulators to greenlight its service.
Quick, Jump on the bus... (Score:3)
...now that it has crashed.
Re: (Score:2)
Yeah, I know that Fidelity was hyping their entry into crypto with mutual funds that held them... back when Bitcoin was around $50,000 back in 2020. I haven't heard much from them about that since 2022.
North Korea dictator is laughing his ass off (Score:1)
Re: North Korea dictator is laughing his ass off (Score:2)
It's far easier to do this with cocaine soaked US dollar bills. Let's ban USD!
Traditional Firms Risk Their Reputations (Score:4, Insightful)
These actions could easily discredit existing firm reputations if crypto is part of their main brand.
And if their crypto divisions are not part of the main brand, who would want to bother with them?
Re: (Score:3)
Indeed. This is a losing proposition.
A few years back, I personally was involved in a security analyse for a system design where a large bank wanted to store and exchange crapcoins for their customers. They scrapped it later before going live because a) them being a bank would have meant it had to be fully regulated and b) it was not core business in any way just a gadget to offer. They decided that the risk of something going wrong and damaging their reputation was way too large and in no way worth the pot
Re: (Score:2)
Wall Street isn't concerned about "reputation".
This is just a new scam for them (although they are late to the game). I predict they will have some success in luring a few ignorant stragglers to this scam.
Re: (Score:2)
I recently had an interview with some kind of finance company and the first thing that bothered me was that they were involved in crypto even though they were pretty old. Later on the team seemed really excited about technologies that are good for business but not really good for nerds. Sure I use it but I can’t pretend infrastructure as code is fun or good for my trade.
KYC kills it (Score:2)
For one thing, a legitimate customer doing business with an unregulated shithole like Binance, which requires deeply intrusive KYC, it absolutely ridiculous. Anyone who uses these services and complies with all their KYC bullshit is an idiot. Your private and valuable information WILL be used to enhance their profitability. They probably don't even store it securely, so it will likely be compromised in the near future.
For another thing, non legitimate customers, by which I mean people actually wanting to do
Re: (Score:1)
For another thing, non legitimate customers, by which I mean people actually wanting to do money laundering, would also be stupid doing business with them, or with a regulated entity of course.
Most money laundering is done through regulated banks. It's simply disguised as legitimate commercial activity.
Since when did Wall St want regulation? (Score:3)
Huh? I thought this was the same investment banker crowd that wanted no regulation, and now they're saying the prefer regulation?? I don't get it.
... not themselves. Ok. That makes sense.
Hang on. I misread that. Wall St. wants the other guys to be regulated
bit banks (Score:2)
Amateur grift replaced by professional grift (Score:3)
After the pros take over, expect to see crypto in the wild become illegal. Kind of like how it's illegal to sell home made liquor without a license, or run a gambling place. Regulated or unregulated, the house always wins. The only difference is who gets to skim the profits.
Re: (Score:1)
In some ways, I'm wondering this. Since cryptocurrency and NFTs are/were a way to do tax evasion and money laundering, I'm sure they will be banned somehow... which doesn't mean they will be blocked, as there will be proxy services for those who can afford it, but anyone poor will be hung up to dry and be tossed in the clink for private prison profit. Same as Prohibition and the War on Drugs... it was more of a pogrom on poor people than actually an interest in blocking those activities.
That sounds wayy too late (Score:2)
My take is that most fools with money have already been harvested.
How will legit companies run such a scam? (Score:2)
That a college kid runs a billion dollar scam from his Bahama's bedroom while having hot orgies with it dorky CFO girlfriend, is something I can still comprehend.
But how is a legit Wall Street firm thinking to run a ponzi scheme with all the government oversight and audits?
Custody platforms? (Score:2)
Custody platforms scare me. Yes, in theory, they -may- have better security because they have more money to throw at it, but realistically, there isn't even anything comparable to an enterprise HSM in the crypto sector. At best you can buy a Trezor Model T, or some other hardware wallet that is kinda-sorta secure for someone keeping a few thousand in cryptocurrency, but for the big numbers, there isn't any real regulation, procedure, insurance, or process to store the high-zoot crypto stashes, and ensure
Don't believe govt propoganda (Score:2)
Why the SEC is hostile right now (Score:2)
Explains why the SEC is hostile to crypto right now. Once their NYC based firms are done playing catch up they will magically be friendly once their pals are ready to join the game.