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The Problem with Fidelity’s Crypto Trading Platform

October 16, 2018

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International Banks, Buffet and Dealing with Novelty


Growing interest from investors is reaching the tipping point, but banks are scrambling to fit digital currencies into the established boxes. But in a recent interview, Warren Buffet calls buying cryptocurrencies “gambling,” and on bitcoin: “nobody knows exactly what it is.” He seems completely right by looking at what American financial governing bodies have done in the past five years:


  • Currency - 2013 - FinCEN

  • Property - 2014 - IRS

  • Commodity - 2015 - CFTC

  • Security - 2017 - SEC


Cryptocurrencies are an entirely new financial game. The pieces don’t fit in the game these institutions know. So yes, Warren Buffet is correct in his world. Headlines are claiming massive interested from Big Banks to nail down regulations and get these new pieces on their board. An “insider” from JP Morgan is quoted:


Truth be told this is the next arms race. Everyone is rushing into cryptos. Everyone. There isn’t a bank, a fund, a fund company, a former legend attempting to reclaim old glory, private equity, venture capital, lending, exchanges, consulting firms – everybody. It is the digital gold rush. And our firm wants to get there and pull as many levers as we can.


This is happening around the world. A leading Japanese financial group SBI Holdings is working hard on launching a cryptocurrency exchange, but getting the regulatory system and security in place is slowing them down. The group also holds 25% stake in Bank Negara Indonesia - a state-owned Indonesian bank, which may help bridge the gap toward establishing regulations.


Buffett Buys the Farm


If you buy something like a farm, an apartment house, or an interest in a business… You can do that on a private basis… And it’s a perfectly satisfactory investment. You look at the investment itself to deliver the return to you. Now, if you buy something like bitcoin or some cryptocurrency, you don’t really have anything that has produced anything. You’re just hoping the next guy pays more.


Farms are probably as foreign to Millennials as Bitcoin is to Buffett, and most don’t have the money to buy a farm or apartment house outright. Proof-of-Stake produces returns similar to dividends by holding the the cryptocurrency. Others lower the barrier of entry to investments with methods like tokenization, such as Blocksquare is doing with real estate.




By: BGN Editorial Staff



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