Morgan Stanley Becomes Second Wall Street Bank to Clear Bitcoin Futures

Morgan Stanley and Goldman Sachs are now the only two banks clearing Bitcoin futures for select institutional clients.

The demand for Bitcoin futures has continued to rise in 2018, prompting Morgan Stanley to join the growing ranks of big banks responsible for clearing these contracts. The development follows after last month’s announcement that Goldman Sachs would clear Bitcoin futures for select institutional clients.

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In December, both CME Group and CBOE launched Bitcoin futures, which have by and large seen early success and popularity despite some minor setbacks. In parallel, Morgan Stanley has become only the second bank to clear futures contracts for big institutional clients. Bloomberg has reported that Morgan Stanley has entered into this space, which includes a growing emphasis on how to handle and engage with cryptos.

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Morgan Stanley’s Chief Financial Officer, Jonathan Pruzan, reiterated this sentiment, noting: “If someone wants to do a trade on the futures and settle in cash, we’ll do that. I wouldn’t say it’s been a lot of activity, but it’s for core institutional clients who want to participate in a derivatives transaction.”

Indeed, Wall Street banks and other venues have finally started to embrace cryptos, namely Bitcoin futures. As the only two players so far to make the foray into Bitcoin futures clearing, Morgan Stanley and Goldman Sachs are in uncharted territory.

The stance echoes that of Goldman Sachs, which underscores a limited, albeit established niche of Bitcoin futures clearing for specific clients. Like Goldman, Morgan Stanley has yet to reveal any plans to act in anything beyond an agency capacity.

Morgan Stanley’s management is keeping mum on the subject, giving no indication as to whether it would take additional steps to get involved with market making or other custodial responsibilities involving cryptos. For now, the bank’s focus appears to be limited only to clearing, though the demand from big institutional clients could ultimately foreshadow other players entering the market.

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