- 1 Wall Street investors have showcased an increasing amount of interest towards Bitcoin and other cryptocurrencies in recent months. Interestingly enough, the momentum now seems to be shifting from Bitcoin futures to a more physical approach.
- 2 Wall Street Continues to Favor Bitcoin
- 3 There is a good reason why Wall Street investors are flocking towards Bitcoin. Despite the industry being quite volatile, the price swings also allow people to make a lot of money.
- 4 For those investors on Wall Street willing to take a risk, EFP transactions are of great interest. EFP stands for ‘exchange for physical’, which doesn’t necessarily seem to fit Bitcoin at first. However, when looked at closely, it does make a lot of sense for investors to pursue this option, mainly because these EFPs are still backed by Bitcoin futures. In this regard, ItBit completed its first transaction together with E D & F Man Capital Markets.
- 5 What’s the Cause of All This Interest?
- 6 One reason Wall Street investors are showing an interest in EFPs is to hedge their futures positions. Additionally, it also helps them diversify their exposure to specific assets. Cryptocurrency is about so much more than just Bitcoin, although that will still be the main gateway for a lot of traditional investors. Every single EFP transaction is conducted off-exchange, mainly through the help of brokers. Settlement of this transaction is still reported to the exchange so as to ensure everything is done on according with existing compliance requirements
- 7 The concept of EFPs is nothing new within the world of finance. More specifically, this business model is used for clients looking to settle physical assets, ranging from wheat to treasuries and everything in between. Extending this functionality to Bitcoin futures offered by CME makes sense on paper. It also shows how cryptocurrencies are evolving and gaining more maturity.
- 8 Final Thoughts
- 9 Although the solution being offered by ItBit might not make Bitcoin more appealing to most Wall Street investors, it does offer them with an alternative that would otherwise have remained inaccessible.