Bar­clays sounds out clients on trad­ing cryp­tocur­ren­cies

Business World - - BANKING & FINANCE -

BAR­CLAYS PLC has been gaug­ing clients’ in­ter­est in the Bri­tish bank start­ing a cryp­tocur­rency trad­ing desk, po­ten­tially join­ing Gold­man Sachs Group Inc. in pi­o­neer­ing a new busi­ness on Wall Street, ac­cord­ing to peo­ple with knowl­edge of the mat­ter.

Bar­clays has so far only done a pre­lim­i­nary as­sess­ment of de­mand and fea­si­bil­ity, said the peo­ple, who asked not to be iden­ti­fied be­cause the in­for­ma­tion isn’t pub­lic. The bank said Mon­day it cur­rently has no con­crete plans to start such an oper­a­tion.

“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,” spokesman An­drew Smith said in an e-mailed state­ment.

A crypto trad­ing desk would re­quire ap­proval from in­vest­ment bank boss Tim Throsby, and po­ten­tially Chief Ex­ec­u­tive Of­fi­cer Jes Sta­ley, given the nov­elty of the as­set class, risk and com­pli­ance re­quire­ments, ac­cord­ing to one of the

peo­ple. No other big Euro­pean in­vest­ment bank is known to be build­ing such a desk.

De­mand for such ser­vices is plen­ti­ful. Hedge funds that deal with Bit­coin and other vir­tual cur­ren­cies have been ea­ger to find banks to han­dle transactions — much like prime bro­kers do with se­cu­ri­ties — and po­ten­tially serve as cus­to­di­ans of dig­i­tal as­sets. Some money man­agers have strug­gled to ex­pand into crypto, in part be­cause of rules that pre­vent them from us­ing un­reg­u­lated ex­changes to trade and hold in­vest­ments.

The num­ber of hedge funds fo­cused on crypto reached 226 in mid-Fe­bru­ary, ac­cord­ing to Au­tonomous Re­search, up from 37 at the start of 2017. Many were formed or piled into the mar­ket as Bit­coin’s price sky­rock­eted last year.

Last week, a team of Bar­clays an­a­lysts led by Joseph Abate laid out a pric­ing model for Bit­coin that wasn’t ex­actly bullish, treat­ing it like a dis­ease and pre­dict­ing it’s prob­a­bly on the de­cline.

The model di­vided the pool of po­ten­tial in­vestors into three groups: sus­cep­ti­ble, in­fected and im­mune. The an­a­lysts as­sumed that when prices rise, “in­fec­tions” spread by word-of-mouth.

But at some point, the num­ber of po­ten­tial hosts would be used up, caus­ing prices to plateau be­fore even­tu­ally fall­ing.

“The most re­cent peak may have been the ul­ti­mate top,” they wrote. “The spec­u­la­tive froth phase of crypto cur­rency in­vest­ment, and per­haps peak prices, may have passed.” •

PEDES­TRI­ANS walk past a branch of Bar­clays bank in Lon­don.

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