After years of vocal opposition to cryptocurrencies, a number of major Wall Street players have begun to embrace the sector, according to a Monday (April 25) Bloomberg report.
For example, the report says, Jefferies Financial Group has expanded its banking services for crypto clients, Goldman Sachs has increased crypto trading, and BlackRock Inc. is investing in the stablecoin company Circle.
In addition to its $400 million investment, BlackRock also formed a partnership with the company to examine the capital-markets use of USD Coin, a stablecoin pegged to the U.S. dollar.
Blackrock already manages some of the $50.3 billion in cash and treasuries that back Circle and CEO Larry Fink said recently he expects his firm to eventually become the primary manager of those reserves.
However, the report notes that the banking industry’s past skepticism could hamper its efforts to compete in the crypto space.
“Banks are forever going to be trying to play catchup,” Michael Moro, CEO of digital currency prime brokerage Genesis, said in the report. “Crypto is going to move way faster than banks can. We have every bank in the world pretty much having some sort of crypto, blockchain working group.”
Last week saw news stories about the head of Goldman Sachs meeting with the founder of crypto exchange FTX to discuss a possible collaboration and a new report from Morgan Stanley on crypto becoming more mainstream.
In 2021, institutional investors traded $1.14 trillion in cryptocurrencies on Coinbase — the largest crypto exchange in America — a ninefold increase over the previous year.
But with this increase has come added scrutiny.
U.S. Treasury Secretary Janet Yellen has warned of possible risks from markets that use crypto and blockchain for transactions. And last month, President Joe Biden signed the first executive order aimed at digital tokens to help address potential threats.