Bitcoin (BTC) has become a new institutional asset class, according to a new report by Wall Street banking giant Morgan Stanley.
As reported by industry website Coindesk, the US bank yesterday published an update to “Bitcoin Decrypted: A Brief Teach-In and Implications”, which focused on the developments and trends observed across the Bitcoin space over the past six months. The report revealed that Morgan Stanley’s view on Bitcoin had changed over time, evolving from initially defining the crypto coin as “digital cash”, through a solution for issues in the financial system and later a new payment system, to a new institutional investment class.
The company’s “rapidly morphing thesis” on the cryptocurrency reflects the evolution of its understanding of the cryptocurrencies, shaped by various discoveries related to the Bitcoin ecosystem, such as the permanent ledger recording all transactions, hard forks, exchange hacks, market volatility and rival technologies that are cheaper than the original cryptocurrency. Based on that, the report argues that Bitcoin is now a new institutional investment class, and has been for almost a year.
The report pointed to the amount of crypto assets under management, noting that it had been increasing since January 2016. According to the report, currently $7.11 billion of crypto are being stored by hedge funds, venture capital firms and private equity firms.
Further supporting this thesis is growing involvement of major financial institutions, Morgan Stanley researchers wrote, citing recent developments, such as Fidelity Investments’ plan to launch crypto services and the completion of a $300-million Series E funding round by the largest US digital currency exchange Coinbase. At the same time, the researchers three issues clients had with investing in the cryptocurrency space: regulatory uncertainty, a lack of regulated custodian solutions and a current lack of large financial institutions in the space.