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The Problem with Fidelity’s Crypto Trading Platform

October 16, 2018

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Morgan Stanley Cryptocurrency Research

November 2, 2018


In a second controversial research report, Morgan Stanley’s financial experts are counting cryptocurrencies as a definitive institutional investment class.


“Bitcoin Decrypted: A Brief Teach-in and Implications” provided a general summary of the cryptocurrency, and specifically the movement of Bitcoin over the last six months. This is important because BTC is the basis for the vast majority of cryptocurrency related investment products now being offered and looking to gain regulatory approval.


Thought Bitcoin is still widely regarded as a speculative investment by the general public, the perception is certainly changing. Proof is in the growing use of Bitcoin as a store of value and a means to avoid financial crisis. The researchers observed that since 2009  perceptions and the cryptocurrency market itself has been rapidly morphing for the better.


The report highlighted the value of a permanent ledger, and the emergence of novel and cheaper technologies for sending cross-border payments. The study cited new services division from Fidelity and prominent investments in crypto firms such as Binance as a means to push regulatory understanding and integration.


Financial Crash Relationship


The first ever block of transactions on the Bitcoin ledger includes a note that references a UK Times newspaper: “03/Jan/2009 Chancellor on brink of second bailout for banks.” This is a blatant reference to the importance of decentralized, open-source, P2P currencies and the downfall of a currency system that allows fractional reserves.


In the Morgan Stanley research released in May of this year, this topic was a primary focus. Led by strategist Sheena Shah, the report highlighted the potential of cryptocurrencies to allow central banks to take interest rates into deeper negative territory should they need to in the event of a major financial crisis.


During the financial crisis of 2008, central banks cut interest rates to protect the consumers and lenders from the major impacts that were felt. However, this sent a number of central banks into negative territory, with the damage still seen today.


“Theoretically, a monetary system that is 100% digital may enable deeper negative rates. This appeals to certain central banks…Freely circulating paper notes and coins (cash) limits the ability of the central banks to force negative deposit rates. A digital version of cash could theoretically allow negative deposit rates to be charged on all money in circulation within any economy.” - Sheena Shah



By: BGN Editorial Staff

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