Cryptocurrencies More Assets Than Actual Currencies, Says Morgan Stanley

Journalist:
June 15, 2017

In a 43-page whitepaper titled “Blockchain: Unchained?” , Morgan Stanley stated that both investors and regulators view cryptocurrencies as assets than actual currencies.

Morgan Stanley released the whitepaper on Tuesday, however, since the report was not distributed publicly, CCN was unable to get it, for now. We’re covering takeaways from it, nonetheless, including Morgan Stanley analysts’ take that bitcoin needs regulation to take off. Meanwhile, the likes of Bloomberg, Business Insider, and Barron’s, analyzed the paper and summarized the most important parts of it.

“Investment Vehicle” Instead Of Fiat Currency

The analysts, including James Faucette, stated that BTC and other cryptocurrencies, such as Ethereum and Ripple, are more like “investment vehicles” than fiat currencies that people can spend on products and services. Additionally, Morgan Stanley analysts added that bitcoin represents a “marginally more inconvenient way to pay” and there are only a handful or reasons to use the cryptocurrency instead of a credit or debit card. The Morgan Stanley report goes by:

“Most regulators and investors view cryptocurrencies more as assets than actual currencies. Their values are too volatile and too hard to actually use for payment for most to consider them currencies. Our conversations with some merchants indicate that, while cryptocurrencies might actually be attractive for them to operate their businesses, they find that the cryptocurrencies are far too volatile to be used.”

Morgan Stanley reported on both the factors that had driven the value of bitcoin down and up.

The Negative Factors

One of the main factors, according to the financial institute, is that the U.S. Securities and Exchange Commission (SEC) rejected the Winklevoss twins’ objective to launch the first-ever bitcoin exchange-traded fund (ETF).

Another reason is the declining trade volume of the cryptocurrency, while the analysts also listed the inspection of China’s Central Bank on bitcoin exchanges in the country (which involved BTCC, OKCoin and Huobi).

The Positive Factors

Morgan Stanley could only list some “guesses” about the price increase of bitcoin. According to the report, the analysts do not have a clear reason why the cryptocurrency has been on a massive surge.

“It is not clear why cryptocurrencies are appreciating so rapidly (apart from the appreciation itself drawing in more speculation against a potentially inefficent ability to sell),” the bank said in a note.

The financial institute listed three guesses for the increase of bitcoin. The first one is Initial Coin Offerings (ICOs), which are used by some companies to offer investors digital tokens in exchange for cash. Some firms received loads of fundings using ICOs, for example, the Ethereum-based enterprise management platform Aragon raised $25 million in just 15 minutes.

Secondly, the strict limits on the currency outflows in China make bitcoin popular in the country to bypass such limits, according to Morgan Stanley analysts.

Finally, the increased investments in Japan and Korea also contributed to the surge of the cryptocurrency. Morgan Stanley explains the rising investment in Japan by the recent regulations, however, the bank writes that “in Korea, however, there is not a clear explanation for the surge.”

Featured image from Shutterstock.

Benjamin Vitáris

Ben is a crypto journalist and copywriter who has a great passion for blockchain technology. He believes that decentralization empowers people to take charge of their lives, and gives back what we desired for a long time: financial freedom. Follow him on Twitter @BenjaminVitaris or email him directly at dzsuvalance(at)gmail.com. Benjamin is crafting crypto content from his home office in Budapest, Hungary.