One step forward, two steps back. Or maybe five steps forward and one step back. Hell, it’s hard to tell anymore.
Around 24 hours after Bitcoin enthusiasts learned that Peter Thiel is sitting on a giant position in the cryptocurrency worth hundreds of millions of dollars, Wall Street Journal – which broke the Thiel story – is out reporting that Merrill is blocking clients and advisors from buying Bitcoin.
Apparently, this is a new ban that also includes the Grayscale Investment Trust bitcoin fund. It applies “to all accounts and precludes the firm’s roughly 17,000 advisers from pitching bitcoin-related investments [and from] executing client requests to trade GBTC.”
This is in addition to a standing policy that bars access to Bitcoin futures.
“The decision to close GBTC to new purchases is driven by concerns pertaining to suitability and eligibility standards of this product,” an internal memo seen by WSJ reads.
Open positions in brokerage accounts can stand, “but not in fee-based advisory accounts,” a person familiar with the decision told the Journal.
This of course comes as Wall Street struggles to figure out how to capitalize on the latest craze while guarding against any reputational damage that would invariably accompany a “mistake.”
Goldman is set to be the first blue chip bank to take the plunge into cryptocurrency market making and if other firms don’t want to get left in the dust at a time when trading revenues are declining thanks to record low cross-asset vol., they’ll be forced to enter the fray one way or another.
For now though, Merrill has decided to err on the side of caution – at least as it relates to GBTC and futs.
It’s sort of like being at a Jim Jones memorial and being offered a refreshing glass of cool aid. That is the necessity of someone having to tell you not to drink the damn cool aid.