Wall Street considers trading bitcoin on virtual exchange

New interest represents new chapter in renegade history of cryptocurrency

SAN FRANCISCO— Some of the biggest names on Wall Street are warming up to Bitcoin, a virtual currency that for nearly a decade has been consigned to the unregulated fringes of the financial world.

The parent company of the New York Stock Exchange has been working on an online trading platform that would allow large investors to buy and hold bitcoin, according to emails and documents viewed by the New York Times and four people briefed on the effort who asked to remain anonymous because the plans were still confidential.

The news of the virtual exchange, which has not been reported before, came after Goldman Sachs went public with its intention to open a Bitcoin trading unit — most likely the first of its kind at a Wall Street bank. The moves by Goldman and the Intercontinental Exchange, or ICE, the parent company of the New York Stock Exchange, mark a dramatic shift toward the mainstream for a digital token that has been known primarily for its underworld associations and status as a high-risk, speculative investment.

The new interest among Wall Street power brokers also represents a surprising new chapter in the renegade history of Bitcoin. The virtual currency was created after the 2008 global financial crisis by a stillanonymous programmer who used the name Satoshi Nakamoto. The idea was to replace the existing banking structure with an online alternative that couldn’t be controlled by a handful of powerful organizations.

But instead of being replaced, the old banks are beginning to assert their own role in the unorthodox financial world of virtual currency, sometimes called cryptocurrencies.

While Bitcoin was originally designed to be used by consumers for all sorts of transactions — without any financial institutions getting involved — it has mostly become a virtual investment, stored in digital wallets and traded on mostly unregulated exchanges around the world. People buy bitcoin in the hope that its value will go up, similar to the way they purchase gold or silver.

Details of the platform that the Intercontinental Exchange is working on have not been finalized and the project could still fall apart, given the hesitancy among big Wall Street institutions to be closely associated with the Wild West of virtual currencies. A spokesperson said that the company had no comment.

Many corporations and governments have expressed interest in the technology that Bit- coin introduced, particularly a form of database known as the blockchain.

Some large financial exchanges, including the Chicago Mercantile Exchange, have already created financial products linked to the price of bitcoin, known as futures. But the new operation at ICE would provide more direct access to Bitcoin by putting the actual tokens in the customer’s account at the end of the trade.

ICE has had conversations with other financial institutions about setting up a new operation through which banks can buy a contract, known as a swap, that will end with the customer owning bitcoin the next day — with the backing and security of the exchange, according to the people familiar with the project.

Old banks are beginning to assert their own role in the unorthodox financial world of virtual currency