Morgan Stanley's report "Cryptocurrencies Have Now Become an Institutional Asset Class"
Investment themes are evolving
In the latest edition of "Bitcoin Decrypted: A Simple Debate and Implications," Morgan Stanley's Research Department dives into Bitcoin's past six months and highlights its trends.
What stands out is that it states the themes are being “rapidly formed.” The report defines Bitcoin as “digital cash,” arguing that investors are fully confident, as a solution to issues in the financial system, and ultimately a new institutional investment class for a new payment system.
The evolution of the theme is driven by various issues and discoveries related to the Bitcoin ecosystem, including hacking, hard forks, the rise of cheaper technologies than Bitcoin, and market volatility, according to the report.
Thus, Morgan Stanley's current theme is that Bitcoin is a “new institutional investment class,” and has been so for nearly a year. The amount of crypto assets under management has increased since January 2016. The assets currently held by hedge funds, venture capital, and private equity firms total $7.1 billion.
The report continues by noting that the fact that major financial institutions are increasingly involved supports this theme. It cites Fidelity’s new cryptocurrency services arm, Seed CX, BitGo and Binance, regulatory approvals, and Coinbase’s recent fundraising rounds.
Additionally, the report points out three issues as clients have invested in the crypto space: regulatory uncertainty, the lack of regulated custody, and the absence of large financial institutions in the current space.
