Sanford C. Bernstein: ‘Crypto Trading Revenue May Double’
Amid a cryptocurrency market downturn, institutional investor interest continues to take rise. Reported Aug. 17, investment firm Sanford C. Bernstein has predicted that crypto exchange revenue will double by the end of 2018.
Wall Street Catching Up to Crypto
New York-based investment firm Sanford C. Bernstein & Co. analysts have forecasted that cryptocurrency exchange revenue will double to nearly $4 billion this year, reports Bloomberg.
In a report, titled “Crypto Trading – the Next Big Thing is Here?”, Bernstein analysts wrote:
“As the crypto-asset class seasons and institutional demand builds, there are a plethora of opportunities for traditional firms”
Led by Christian Bolu, Bernstein analysts estimated that cryptocurrency trading generated $1.8 billion in transaction fees for the largest exchanges in 2017. This figure represents only 8 percent of the revenue recorded by traditional exchanges but continues to grow.
Meanwhile, institutional investor interest is on the rise, as Wall Street eyes a multi-billion dollar market share opportunity that is already being dominated by first-movers.
Bernstein analysts consider San Francisco-based startup Coinbase a current market leader, responsible for almost 50 percent of all cryptocurrency trading transaction revenue. According to Bernstein, Coinbase will maintain an “unassailable competitive position” unless other major investment firms join the sector.
Institutional Solutions on the Rise
In early May, Goldman Sachs confirmed plans to launch a Bitcoin futures trading desk to meet rising client demand. One month later, the firm revealed plans to expand its cryptocurrency division beyond Bitcoin futures.
Morgan Stanley also began clearing Bitcoin futures contracts at the start of 2018.
Coinbase launched its own custodial service for institutional investors, called Coinbase Custody, in early July.
Shortly after, Coinbase secured a $20 billion hedge fund through its prime broker to give institutional investors access to a greater variety of financial services, such as margin financing.
On June 26, Cboe futures exchange submitted a Bitcoin ETF application to the U.S. Securities and Exchange Commission (SEC). The application will be under review until late September.
In the onset of regulated digital asset derivatives and security token markets, it’s evident that a growing number of major investment firms are preparing institutional solutions for the developing digital economy.
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