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How Banks Are Investing in Digital Assets
How Banks Are Investing in Digital Assets
If at first traditional finance was skeptical about cryptocurrencies and digital assets, last month made it clear investing in digital assets is an industry-wide priority.
11/10/2021
Index Coop
Major Financial Institutions Hiring Crypto Talent
If at first traditional finance was skeptical about cryptocurrencies and digital assets, last month made it clear investing in digital assets is an industry-wide priority.
Deutsche Bank, Wells Fargo, Citigroup, Capital One, UBS, Bank of America, and other major financial institutions are all focused on hiring talent in crypto to stay ahead of the curve, including professionals that can design crypto offerings and engineers that can build blockchain technologies.
Though CEO of JP Morgan Chase Jamie Dimon originally called Bitcoin a fraud back in 2017, the bank has redirected their attention to crypto — including creating their own coin. JPM Coin was launched in 2019 by Onyx, a division of the bank on an internal platform modeled off of the blockchain. In recent months, the bank also began offering to place private bank clients into a few crypto funds, most recently through the crypto firm NYDIG.
In March, Morgan Stanley became the first big bank to offer cryptocurrency investment to clients who have over $2 million in assets. The shift came after clients’ insistence that they have exposure to crypto investments. Goldman Sachs added a digital assets trading desk division earlier this year and has begun trading bitcoin-linked derivatives.
“In the next five to 10 years, you could see a financial system where all assets and liabilities are native to a blockchain, with all transactions natively happening on-chain,” Mathew McDermott, the new global head of digital assets at Goldman Sachs said in an interview. In October, the bank also began sending hedge fund clients information about crypto research through their digital platform containing 50,000 investors, with the first report covering DeFi and Ethereum, a move that further confirms major investors in the traditional finance space are seeking out opportunities for cryptocurrency investing and analysis.
Last month, Mastercard also announced it would be partnering with Bakkt, a company that recently went public, to expand into the crypto space by offering clients crypto wallets, rewards in crypto, and the ability to earn points that customers can convert into crypto or spend at a retailer. “We want to offer all of our partners the ability to more easily add crypto services to whatever it is they’re doing,” Sherri Haymond, Mastercard’s executive vice president of digital partnerships, told CNBC.
The first cryptocurrency ETF, the ProShares Bitcoin Strategy ETF (BITO), started trading last month, too, and tracks bitcoin future prices. Other banks and payment processing companies are transitioning to accepting crypto on their platform as well. Venmo, the popular peer-to-peer payment platform owned by PayPal, recently incorporated crypto onto their platform by allowing users to buy, hold or sell Bitcoin, Ethereum, Litecoin or Bitcoin Cash.
As more and more big institutions are investing in crypto, the Federal Reserve is discussing whether to release their own digital currency as of September and will release a report later this year.
About Index Coop
Index Coop is a decentralized autonomous organization (DAO) that powers structured decentralized finance (DeFi) products and strategy tokens using smart contracts on the blockchain. We offer a suite of sector structured products, leverage and inverse products, and yield-generating products. We aim to create products that are simple to use, accessible to everyone and secure. Our products are built on Set Protocol, a twice-audited, self-custodial DeFi tool that allows for the creation and management of Ethereum-based (or ERC-20) tokens. Among users, partner protocols, and our composable products, Index Coop maintains one of the largest partnership networks in the DeFi ecosystem.
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FAQs
Index Coop yield tokens simplify earning yield in DeFi by automating complex strategies and diversifying across protocols. They are user-friendly and cost-efficient, appealing to both new and seasoned DeFi users.
Leverage tokens automate a leveraged position by utilizing onchain money markets like Aave or Morpho to borrow funds, amplifying a user's exposure to an asset without requiring manual management. The token's smart contracts autonomously handle the borrowing, lending, and rebalancing of assets, maintaining a consistent leverage ratio despite market fluctuations. This automation eliminates the complexities of collateral management and liquidation risks, while also charging low, transparent fees that avoid expensive funding rates often charged by perps.
Index Coop is a decentralized autonomous organization (DAO) that specializes in creating and maintaining onchain structured products. Index Coop aims to democratize access to the crypto market, empowering everyone to participate in the growing digital asset ecosystem with ease.
No, yield automatically compounds and accrues to the token price. The value of the tokens you hold in your wallet will simply go up over time without the need to claim or compound rewards.
Index Coop products protect you from liquidation with automated risk management that rebalances assets to maintain a target leverage ratio that avoids liquidation.
INDEX is the ERC-20 governance token on Ethereum for Index Coop. INDEX empowers its holders to participate in decision-making processes that shape the future of Index Coop.
Yes, all Index Coop products are instantly redeemable for their underlying value at all times.
Yes, all Index Coop smart contracts have been audited by leading independent security firms such as OpenZeppelin, ABDK, Isosiro, & more. There is also an active bug bounty program through ImmuneFi. Audit information is published in the docs here.
Streaming fees (an annual fee paid continuously block-by-block), mint and redeem fees (only on leverage tokens), and borrow costs (interest paid to borrow funds from onchain markets when using leverage).