Ready or Not Wall Street is Coming for Bitcoin, But Can “They” Undermine Cryptocurrencies
The Intercontinental Exchange (ICE), owner of the New York Stock Exchange, said that it wants to launch a regulated cryptocurrency exchange. This is very important for the crypto world because it would allow investors to place their funds in the virtual currency market in a very easy way.
Moreover, it is also very bullish. Crypto enthusiasts want to see worldwide adoption of digital asset, something that is not easy to achieve. But the ICE launching a regulated crypto exchange would certainly help.
The ICE owns over 20 different exchanges, market services and clearing houses. This could clearly attract many other wealthy investors such as hedge funds, family offices, sovereign wealth funds and many others.
So many similar firms have been trying to enter the market but it was usually difficult for them to do it. There are is no infrastructure and proper regulations to protect investors. Indeed, the lack of conventional market infrastructure has clearly played an important role for these companies not to invest in cryptocurrencies.
According to Caitlin Long, an important Wall Street investor, the financial industry could harm the space if they treat Bitcoin as they treat other conventional assets. The problem is that Bitcoin and other virtual currencies, compared to Wall Street, operate in a different way.
Bitcoins are owned by users on their personal wallets. However, every single time an investor buys stocks, an institution or a custodian owns the stock or asset. Users can only have an IOU from a broker.
Bitcoin, using blockchain technology, prevents more than one person from owning a single asset.
Additionally, companies in Wall Street use clients’ assets to back their own transactions by using them as collateral. This practice ‘create more claims to an underlying asset than there are underlying assets.’
It is important to understand that if companies treat Bitcoin in the same way as they treat other assets, they will be making a big mistake.
According to Long, this situation is ‘antithetical’ to Bitcoin. Bitcoin is scarce by nature, and it is not clear how companies from Wall Street will deal with this situation.