- Barclays Plc is investigating clients’ response to trading crypto.
- However, Barclays states it presently has no plan to commence such operation.
Report from people knowledgeable about the matter has it that Barclays Plc has been sampling out the opinions of customers about starting a crypto trading desk, possibly joining Goldman Sachs Group Inc. in establishing a new business on Wall Street.
The people, who have asked for anonymity because the report isn’t public yet, said that Barclays Plc has so far only carried out a pilot evaluation of demand and feasibility. Though, Barclays stated last Monday that it presently has no plan to commence such operation. A spokesman for the bank, Andrew Smith, said:
“We constantly monitor developments in the digital currency space and will continue to have a dialog with our clients on their needs and intentions in this market.”
According to one of the people, starting a cryptocurrency trading desk requires approval from Tim Throsby, head of corporate and investment bank and possibly CEO James Edward ‘Jes’ Staley, given the uniqueness of the asset class, risk and compliance requirements. Presently, no other big European investment bank is known to be stating such a trading desk.
Jes Staley has made developing Barclays’ investment bank the main focus of his strategy to revive earnings. Last Sept., Tim promised to rekindle the bank’s “commercial zeal” and approved the transfer of lots of dollars of capital to higher-risk trading activities from vanilla corporate lending. Bitcoin – known for its high volatility, rising above $19,000 last Dec. before dropping by half within four months – could possibly fit in.
Such crypto trading desk services are in high demand. For instance, Hedge funds that deal with cryptocurrencies have been keen on finding banks to handle its transactions.
Aside Barclays, Goldman Sachs is also launching a trading desk by late June to make markets in cryptocurrencies, though people knowledgeable about the matter said its December. However, to do so, Goldman Sachs has to work out security issues, which include how to safeguard assets.
Last week, a team of analysts from Barclays Plc saw a number of similarities between Bitcoin and infectious diseases to develop a pricing model for Bitcoin taking cues from the world of epidemiology.
The model set up by the analysts divides a group of potential Bitcoin investors into three groups, which are the susceptible, the infected and the immune. But at some point, the number of potential hosts would be used up, and this will cause Bitcoin price to level before falling eventually.