All manner of current or former JP Morgan troops seem to be squawking an awful lot about cryptos these days. Seems like ages ago that Jamie Dimon publicly derided Bitcoin and its siblings as a ‘fraud’. Some of you may not even remember those words, as Jamie has since softened his stance.
Now one of Dimon’s former lieutenants has been singing the praises of cryptos in an interview with Bloomberg:
“Daniel Masters, who previously led JPMorgan’s global energy trading desk, says cryptocurrencies are fueling a financial revolution. Masters is now chairman of digital investment bank Coinshares and chief investment officer at Global Advisors, and he explained in an interview with Bloomberg how distributed ledger technology is doing for the democratization of peer-to-peer transactions what the internet did for the democratization of news. “That’s at the core of what makes this a revolution,” Masters told Blooomberg.”
The way that Masters sees the world has never been a fight to the death between crypto and the USD/GBP legacy financial system. Instead, he says it’s about “what portion of the total financial ecosystem accrues to cryptocurrencies,” adding: “I think even if it’s only 5% at the end of the day, that market will then still be much bigger than it is today.”
Masters manages more than $800 million in cryptocurrency assets across both passive and active strategies for leading coins such as Bitcoin, Ethereum, Zcash and Monero down to ICOs. As for staying away from the scam ICOs, Masters pointed to a “multi-stage screening process” by which fewer than 3% of small ICOs that come to them make it through their filter.
Even that number may be problematic, as ICO’s tend to be copycat projects at best and money grabs at worst. Masters and his team, though, are well qualified to make those decisions.
The larger point here is that ‘banksters’ are more and more apt to dive in head first with respect to cryptos. Whether it be starting their own hedge fund, VC, or launching their own ICO connected to a passion project. The upshot is that the crypto ecosystem is well served to have finance professionals taking measured steps into the space.
And the ‘steps’ will continue. The steps of traditional finance will continue to hunt crypto returns. And to that end, Masters is being followed by his former firm as they piggyback on architecture being built across the crypto ecosystem.
Just the other day JP Morgan sources talked about Bakkt and what it could mean for their involvement in crypto:
“Bakkt provides a clear and clean regulatory construct to engage with Bitcoin. No smoke and mirrors. No regulatory risk. No outsized legal risk. Our compliance and legal team have done a deep dive on Bakkt and our integration/execution protocols. It all works and it all works better than what we expected. The custody solution is the real story there and is ultimately what has provided us the bandwidth (legally) to offer options to clients. If I was forced to disclose where we are headed, take a look at the products that Goldman has become comfortable with and that is what we seem to be comfortable with at this time. Not confirming any product or offering, but I can speculate that we will have a trading desk and that clients will be able to access Bitcoin, via Bakkt, in some way shape or form.”
It isn’t out of the realm of possibility that JP Morgan has been sending crypto-minded clients to Daniel Masters’ fund as they get their own digital asset strategy finalized. As a former respected banker at the firm, who left on good terms, it would be the kind of transaction that is typical in the UHNW banking space – feeder funds.
Connecting the dots when it comes to institutional ‘footsie’ with crypto is getting easier and easier. Goldman Sachs has made a number of investments in custody solutions and in-house products. Morgan Stanley is preparing Bitcoin and Ethereum products of their own, according to internal sources. Bank of America has filed what amounts to be cold storage patents that assume mass adoption of cryptocurrencies. Bakkt, ICE, CME, CBOE, DRW, TD Ameritrade, Fidelity, ErisX – just to name a few.