2 August 2021
The crypto market’s spring 2021 fall from historic highs may have caused smaller investors some alarm, but interest from investment banks and venture capitalists has intensified.
Crypto-tracking funds are on the menu at a growing number of banks. Zeno Staub, CEO of Switzerland’s $300 billion Vontobel bank, says demand from wealthy clients is driving banks to offer crypto-based investment products.
“Clients have an interest in digital assets,” Staub says. “Clients have an interest in cryptocurrencies… We’ve wrapped some cryptocurrencies in a secure, convenient, easy-to-handle way, and clients appreciate that and allocate part of their wealth to that.”
Vontobel doesn’t sell cryptos directly. Instead, it has created derivative products that track the crypto market for fiat-currency investments.
Vontobel is far from alone. Wall Street’s JPMorgan Chase announced in July 2021 that it would create similar products for its wealthy clients.
State Street, an American financial services and bank holding company with more than $42.6 trillion in assets under custody or administration, announced the same month that it would “provide digital and cryptocurrency asset fund administration capabilities for the firm’s private funds clients.”
State Street announced plans to partner with software development firm Lukka to create financial products that support diversified fiat/crypto portfolios, including “crypto-related features like collection, standardization, reporting, processing, and reconciliation.”
In May 2021, Goldman Sachs announced the creation of a crypto trading desk to serve clients. In an internal memo, the bank informed employees that the desk had successfully traded Bitcoin derivatives. The crypto team is part of the global currencies and emerging markets division and reports to veteran Goldman Sachs executive Rajesh Venkataramani, who wrote the memo.
Mutual fund manager ProFunds has launched a tradeable crypto fund – the Bitcoin Strategy ProFund – which can be traded in the U.S. under the ticker symbol BTFCFC. The fund will allow clients to benefit from crypto price gains without establishing a wallet or owning any Bitcoin.
Henri Arslanian, head of the PricewaterhouseCoopers crypto team, says interest from institutional investors is crowding individuals and smaller investment firms out of the crypto market. Venture capitalists are rushing in with high bids for blockchain and crypto investments, Arslanian says, squeezing most investors out of play.
If there’s one thing players at big banks and investment houses know, it is that bear markets don’t last forever. They jump into markets early in anticipation of growth and higher crypto prices.