The crypto market is growing up

The Wild West days are not over in the cryptocurrency market, but the shoots of a more civilised and reliable market are beginning to poke through.

  • By Lewis McLellan
  • 03 Oct 2017
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Goldman Sachs, surely a standard bearer for the financial establishment, is exploring setting up a trading desk for crypto assets in response to “client interest” in the sector.

The interest in the sector is far from unanimous — Jamie Dimon made his opinion abundantly clear when he called Bitcoin “a fraud” and said he would fire any JP Morgan employee trading Bitcoin for being “stupid” — but the tide appears to be turning against the naysayers.

Some real banks falling victim to the fear of missing out on the sector's growth would not, in itself, indicate much about the market’s development. 

But a grown-up approach to securities law is gradually seeping into the collective consciousness of market participants, ably assisted by a no-nonsense attitude from regulators.

After making its intentions for the cryptocurrency market known at the end of June, the SEC has brought its first charges against a company for crimes relating to an initial coin offering. 

The SEC has charged two companies and their founder, Maksim Zaslavskiy, with violating anti-fraud and registration provisions of securities laws. The regulator alleges that Zaslavskiy ran initial coin offerings for tokens backed by assets that did not exist.

While fraud allegations are not typically the sign of an asset class becoming legitimate, there are other signs beyond Goldman’s potential involvement, which point to a move in the same direction.

Overstock has opened a securities exchange for trading those cryptocurrencies that are deemed securities under the 'Howey Test'. While the makers have lofty ambitions for tokenised versions of virtually all financial assets to eventually be traded on exchanges like theirs, there are already around $2bn of crypto-tokens that now have an SEC-registered home to be traded on.

Protocol Labs, the team behind Filecoin (the first SEC-compliant ICO) is teaming up with Cooley to produce the Simple Agreement for Future Tokens (SAFT) — a framework for crypto securities to follow in order to be in compliance with securities law. The team published the whitepaper for the project on Monday.

Rather than attempting to circumvent regulations, a growing number of market participants are accepting the necessity of working within them. 

As the market's popularity grows, claims that cryptocurrencies will destroy banks' business models and castrate central banks seem ever more outlandish. 

Banks have the expertise and the resources to remake this market in their image: regulated, standardised... a little more boring. While the crypto-anarchist hardcore will likely never disappear, the technology may still have the capacity to become mainstream capital markets’ business in spite of their protestations.

But make no mistake: there is a long way to go and a wild ride ahead. 

The SEC court case will surely be the first of many, and it can't be long before a big market player is hacked. But this, too, will only serve to speed up the cries for firmer regulatory support, and drag the market out of the shadows.

  • By Lewis McLellan
  • 03 Oct 2017

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 358,291.38 1348 9.06%
2 JPMorgan 320,704.66 1461 8.11%
3 Bank of America Merrill Lynch 318,128.31 1104 8.04%
4 Goldman Sachs 236,643.87 789 5.98%
5 Barclays 231,197.41 895 5.84%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 35,007.57 165 6.53%
2 Deutsche Bank 34,880.53 120 6.51%
3 Bank of America Merrill Lynch 31,805.65 97 5.93%
4 BNP Paribas 27,920.60 169 5.21%
5 SG Corporate & Investment Banking 24,398.89 138 4.55%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 19,745.92 80 8.85%
2 Morgan Stanley 16,334.63 83 7.32%
3 Citi 15,972.34 95 7.16%
4 UBS 15,487.17 60 6.94%
5 Goldman Sachs 14,053.61 76 6.30%