Oroville Mercury-Register

As Bitcoin goes mainstream, Wall Street looks to cash in

- By Stan Choe

Love cryptocurr­encies or hate the very idea of them, they’re becoming more mainstream by the day.

Cryptocurr­encies have surged so much that their total value has reached nearly $2.5 trillion, rivaling the world’s most valuable company, Apple, and have amassed more than 200 million users. At that size, it’s simply too big for the financial establishm­ent to ignore.

Firms that cater to the world’s wealthiest families are increasing­ly putting some of their fortunes into crypto. Hedge funds are trading Bitcoin, which has big-name banks starting to offer them services around it. PayPal lets users buy crypto on its app, while Twitter helps people show appreciati­on for tweets by tipping their creators with Bitcoin.

And in the latest milestone for the industry, an easy-to-trade fund tied to Bitcoin began trading on Tuesday. Investors can buy the exchange-traded fund from ProShares through an old-school brokerage account, without having to learn what a hot or cold wallet is.

It’s all part of a movement across big businesses that see a chance to profit on the fervor around the world of crypto, as a new ecosystem further builds up around it, whether they believe in it or not.

“The one thing you can say for certain is that the advent of the era of the Bitcoin ETF opens up the opportunit­y for Wall Street to make money on Bitcoin in a way that it hadn’t been able to previously,” said Ben Johnson, director of global ETF research at Morningsta­r. “The winners in all of this are the exchanges and the asset managers and the custodians. Whether investors win or not is a big, bold question mark.”

Bitcoin has come a long way since someone or a group of someones under the name Satoshi Nakamoto wrote a paper in 2008 about how to harness computing power around the world to create a digital currency that can’t be double-spent. The price has more than doubled this year alone to roughly $62,000. It was at only $635 five years ago.

Supporters of cryptocurr­encies say they offer an ultra-important benefit for any investor: something whose price moves independen­tly of the economy, rather than tracking it like so many other investment­s do. More high-minded fans say digital assets are simply the future of finance, allowing transactio­ns to sidestep middlemen and fees with a currency that’s not beholden to any government.

Critics, meanwhile, question whether crypto is just a fad, say it uses too much energy and point to all the stiff regulatory scrutiny shining on it. China last month declared Bitcoin transactio­ns illegal, for example.

The chair of the U.S. Securities and Exchange Commission, Gary Gensler, said in August that the world of crypto doesn’t have enough investor protection and “it’s more like the Wild West.”

That hasn’t been enough to halt the immense momentum for crypto, as it’s gone from an online curiosity to a bigger part of the cultural and corporate landscape.

U.S. Bank earlier this month said it has begun offering a cryptocurr­ency custody service for big investment managers. That means it essentiall­y holds their Bitcoin in safekeepin­g for them, and it expects to offer support for other coins soon.

Other name-brand banks have also announced intentions to offer custodial services for crypto.

“It’s not just in the fringes and dark corners of the Web that it’s happening,” said Kashif Ahmed, president of American Private Wealth in Bedford, Massachuse­tts.

Ahmed doesn’t recommend his clients invest in crypto. Before then, he said he’ll need to be able to “go to my local supermarke­t and buy things for my family and offer crypto and not be laughed out of the store.”

But others are more willing to try it.

In a survey by Citi Private Bank of family offices around the world that manage money for wealthy people, roughly 23% said they have made some investment­s in crypto. Another 25% said they are researchin­g it.

The growing acceptance of crypto on Wall Street has created a new crop of darlings that help people buy it. Crypto trading platform Coinbase has a market value of roughly $64 billion, for example, putting it on par with such establishe­d companies as Colgate-Palmolive, FedEx and Ford Motor.

At Robinhood Markets, meanwhile, the company that became famous for getting a new generation of investors into the stock market is increasing­ly becoming a place for crypto trading. This spring was the first time when new Robinhood customers were more likely to make their first trade in cryptocurr­encies rather than in stocks.

 ?? KIN CHEUNG — THE ASSOCIATED PRESS FILE ?? An advertisem­ent for the cryptocurr­ency Bitcoin displayed on a tram in Hong Kong.
KIN CHEUNG — THE ASSOCIATED PRESS FILE An advertisem­ent for the cryptocurr­ency Bitcoin displayed on a tram in Hong Kong.

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