Why Morgan Stanley Report Labelled Crypto As New Institutional Investment Class

Wilfred Michael 

Wilfred Michael

News reporter

03 November 2018,
Why Morgan Stanley Report Labelled Crypto As New Institutional Investment Class

Can anyone stay away from crypto right now? Maybe, but not the researchers at Morgan Stanley who just released an update to a paper titled  "Bitcoin Decrypted: A Brief Teach-In and Implications," which they published earlier this year.

The highlight of the updated research paper is that the team defined Bitcoin simply as ‘digital cash,’ before adding that that the payment tool was fast becoming a ‘new institutional investment class.’

This new definition is no doubt good news to the crypto industry, given that it is coming from the research team of one of the world's largest asset managers.


Institutional Investors Are Getting Involved With Bitcoin and Crypto-Related Projects

The new study dug deep into how Bitcoin has fared within the last six months and how institutional investors are getting involved with crypto-related projects during this period.

Interestingly, it was uncovered by Morgan Stanley's research team that the volume of crypto assets held by hedge funds, venture capital firms and private equity firms are now above $7.6 billion.

Among major financial institutions getting involved is Fidelity Investments who have opted to grab the bull by the horn. The asset manager has introduced several crypto asset management packages for its clients and even creating a new crypto services department this year.

There have also been investments into crypto and blockchain based startups from major traditional Investment institutions.

For instance, Bain Capital Ventures led a series B round for crypto exchange company Seed CX, while Coinbase's Series E funding round saw Tiger Global Management, Y Combinator Continuity, Wellington Management, and Andreessen Horowitz all staking high in the project.


Barriers To Mainstream Cryptocurrency Adoption

Despite the massive wins that Bitcoin and other cryptocurrencies have recorded in over the last six months, the paper also pointed out some issues that investors have faced while trying to get involved with the digital asset class.

These include increased regulatory uncertainty, a lack of regulated custodian and derivatives solution and a current lack of large financial institutions in the space.

If the industry were to overcome of these barriers in the near future, then there is no doubt that it will see more mainstream and institutional involvement, the report suggested.

Given that Bitcoin, the oldest creation of the cryptocurrency industry just clocked ten at the end of October, it will be wrong to deny just how much potential the invention holds. A little more institutional involvement would be needed for these potentials to be met, but the signs are positive as we've learned from the Morgan Stanley Report.