Wednesday, 16 October 2019

Barclays Stop Their Crypto Trading Project

Barclays recently stopped a cryptocurrency trading project that began in early 2018. The bearish cryptocurrency market, high levels of market manipulation, and unclear regulations are strong factors that may have led to Barclays’ decision to stop the project.
While Barclays and other financial institutions like Goldman Sachs are stepping away from cryptocurrencies, a number of educational organizations like Harvard and Yale are instead investing in cryptocurrency funds.

Barclays, a British multinational investment bank, recently halted an internal cryptocurrency trading project. While it’s uncertain why Barclays stopped the project, according to the Financial News London’s article published on Oct. 15, the bearish cryptocurrency market may have been a large factor that influenced the investment bank’s decision.

Financial Institutions Shy Away From Cryptocurrencies

Two people familiar with the situation reported to the Financial News that while the British investment bank was eager to enter the cryptocurrency sector earlier this year, the bank decided to change its direction and saw it best to halt its progress on the project.


The bank originally assembled a senior team to explore the potential of cryptocurrencies earlier this year. They were assessing the possibility of incorporating the trading of cryptocurrencies to their existing service. Chris Tyrer, Barclays’ previous head of energy trading, was initially leading the cryptocurrency project in 2018. He, however, left the company in September after Barclays decided to stop the project.

The Financial News mentioned that Tyrer previously worked with Marvin Barth, head of FX and EM macro strategy at Barclays, on the cryptocurrency project. Other key members in the venture included Lee Braine, CTO of the investment bank, and Matthieu Jobbe Duval, a consultant from Barclays.

While it’s unclear why Barclays is halting its cryptocurrency project, it’s not the only large financial institution shelving their cryptocurrency plans. According to Business Insider, Goldman Sachs has also stopped its cryptocurrency trading project.

Just eight months ago, when Bitcoin’s price hit its all-time high at almost $20,000, as seen on CoinMarketCap, Goldman Sachs was preparing to open up a cryptocurrency trading desk and have it up and running by June. As the bearish cryptocurrency market continued throughout 2018, people familiar with the matter reported that the financial institution no longer expressed as much interest. They believe that the uncertain regulatory landscape is the primary reason that financial institutions are cautious of the cryptocurrency industry.

“[E]xecutives have concluded that many steps still need to be taken, most of them outside its control, before a regulated bank would be allowed to trade cryptocurrencies,” said Dakin Campbell and Frank Chaparro from Business Insider. However, as the publication reports, the bank could choose to revive its plans later.

Goldman Sachs representative Michael DuVally spoke to Barron’s, a financial and investment news site, and mentioned that while the financial institution was keen on exploring digital assets in response to increasing client demand in 2017 and early 2018, they’ve unfortunately not reached a clear conclusion on digital assets and have not yet defined their scope.

Educational Institutions Invest in Cryptocurrency Funds

According to The Information, while financial institutions are shying away from cryptocurrencies, the asset class is growing greater acceptance and popularity from some of the top universities such as Harvard University, Stanford University, Dartmouth College, Massachusetts Institute of Technology, and the University of North Carolina. These universities have each invested in at least one cryptocurrency fund from their endowments.

These university endowments invested tens of millions into cryptocurrency funds, which include physical cryptocurrency tokens and equity in certain cryptocurrency firms. The idea that these universities are actively engaging in the cryptocurrency industry is a great validation for the sector and could help legitimize the growing asset class and push the cryptocurrency industry into a state of maturation.

Bloomberg also reported recently that Ivy League school Yale University has also joined the educational institutions listed above as a cryptocurrency investor. Yale’s endowment recently helped a cryptocurrency fund, known as Paradigm, raise $400 million.

Institutional Investors Remain Deterred by the Cryptocurrency Market

Although there are a number of educational institutions investing in cryptocurrency funds, many institutional investors, unfortunately, remain deterred by the bearish cryptocurrency market, high levels of market manipulation, and unclear regulation. These factors are strong barriers to the legitimization of the new asset class. While some believe that the cryptocurrency industry may enter the mainstream market, it may be a long way to go. According to the NEPC consulting firm, in Feb. 2018, there is still 96 percent of endowments and foundations that do not invest in cryptocurrencies.


source: blokt.com
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