Barclays bank that is the second largest bank by assets in the United Kingdom is considering launching a cryptocurrency trading desk. This would be the first cryptocurrency trading platform to be launched by a European investment bank. The bank is still considering whether to extend the trade offers to its entire suite of clients such as institutions and hedge funds. Hedge funds are more interested in trading cryptocurrencies which gives investment banks such as Barclays a growing client base that is carrying out cryptocurrency trading.
The plans are still in the early stages and are yet to be considered by the bank’s top team. However, according to Andrew Smith Barclays spokesperson:
“Barclays has no plans at this time to build a cryptocurrency trading desk. We constantly monitor developments in the digital currency space and will continue to have a dialog with our clients on their needs and intentions in this market going forward.”
It seems the British bank is still figuring out if there is enough demand from its customers for it to enter this line of business. The non-committal comment from the bank’s spokesperson may be an indication that the bank is set to launch the crypto desk soon.
The bank is unlikely to encounter any challenges from regulators while launching the crypto trading desk. Additionally, the demand for the service is there considering the many hedge funds that were launched in 2017. In 2017 most of the professional investors made huge profits trading in cryptocurrencies due to the initial coin offering market.
Such a crypto trading desk would be a pioneering move by the bank towards the adoption of crypto by mainstream financial institutions. Additionally, many of these hedge funds are in need of a large and regulated counter-party as their partners to handle transactions just like prime brokers do with securities.
If investment banks start making markets for cryptocurrency trades, it can make hedge funds and other institutions investors more comfortable to add crypto assets to their portfolios. Banks such as Barclays only need to match the supply and demand. The ICO market is much better now due to the ongoing enforcement actions taken by the US Securities and Exchange Commission. The ICOs global regulatory environment also remains fluid, and traders can still gain returns in the cryptocurrencies market as volatility does create an opportunity for traders And Investors.
Another bank that has been noted to weigh a similar move is the Goldman Sachs. The bank’s launch of its trading desk was under speculation in December last year. However, the CEO Lloyd Blankfein disputed the rumor, but he left the door open for such a launch during his remarks in January this year. The bank already has direct ownership in a cryptocurrency trading desk due to its investment in Circle whose over the counter desk handles more than a billion dollars of cryptocurrencies trades monthly.
One of the issues identified as one of the reasons institutions are not keen to dabble in cryptocurrencies is custodial issues. However, if banks took up this line of business, this particular issues could be sorted and solved for the bank’s clients.