The ascent of bitcoin has got the major investment banks interested, but it seems that they are not the only ones struggling to get their heads round both blockchain and the volatility of these new breeds of crypto-currencies.
Commerzbank is touting a structured note offering ‘exposure to bitcoin without actually investing in it directly’, reports Bloomberg.
An, er, indirect play on the currency itself at best, the note comprises an equally-weighted basket of shares in Microsoft, Shopify and Dish Network- companies seemingly chosen because they accept transactions in bitcoin.
To its credit, Bloomberg ran the numbers and found that the daily correlation of these three stocks to bitcoin’s price movements has been 0.35 at its highest in the last 63 trading sessions, so it is not exactly a pure-play.
Meanwhile, over at Goldman Sachs, the investment bank felt the need to do a Q&A with clients as interest has intensified as they have read about bitcoin’s 200% gains this year alone.
The crypto-currency market is now valued at around $120 billion (£92.3 billion), so is sizeable, albeit question marks remain over both security and the different independent exchanges' ability to handle institutional size bulk orders. Not to mention the at times extreme volatility and the threat of regulatory intervention in certain territories.
In truth, the Q&A, also revealed by Bloomberg, is fairly basic, describing what an initial coin offering actually is and providing a bit of briefing on the second largest crypto-currency by market cap, Ethereum.
As Bloomberg notes, Goldmans stops short of actually suggesting whether or not its clients should invest in this stuff. Albeit to be fair, an investment bank recommending clients pile in gung ho into a completely unregulated ‘asset class’ with proven links to criminality in some quarters would set compliance alarm bells ringing at best.
It is an interesting quandary though and one that has been cogitated by all and sundry, from the likes of major institutions, such as Fidelity, to respected media outlets like Forbes and CNBC. One thing is for certain though- if super-normal returns are being made, investment bankers’ interest will be piqued. Whether they can square the circle of how they approach it though is another matter all together.