In a 43-page whitepaper entitled “Blockchain: Unchained?” Morgan Stanley wrote that both investors and regulators view cryptocurrencies as property than actual currencies.
Morgan Stanley released the whitepaper on Tuesday, but as the report was not dispersed publicly, CCN was unable to get it, for now. I am spreading over takeaways from it, nonetheless, including Morgan Stanley analysts’ take that bitcoin needs legislation to pull off. Meanwhile, the likes of Bloomberg, Business Insider, and ’Barrons, assessed the whitepaper and described the most significant parts of it.
“Investment Vehicle” Instead Of Fiat Currency
The analysts, including James Faucette, mentioned that BTC and other cryptocurrencies, such as Ethereum and Ripple, are more like “investment vehicles” than fiat currencies which people can pay for goods and services. Moreover, Morgan Stanley analysts included that Bitcoin presents a “marginally more inconvenient way to pay” and there are only a fistful or motives to use the cryptocurrency as an alternative to a credit or debit card. The Morgan Stanley report passes like:
“Most regulators and investors view cryptocurrencies more as assets than actual currencies. Their values are too volatile and too hard to use for payment for most to consider them currencies. Our conversations with some merchants indicate that, while cryptocurrencies might be attractive for them to operate their businesses, they find that the cryptocurrencies are far too volatile to be used.”
Morgan Stanley described on both the factors that had driven the value of bitcoin down and up.
The Damaging 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). One more reason is the decreasing trade volume of the cryptocurrency, while the analysts also outlined the ’inspection of Chinas Central Bank on Bitcoin exchanges in the country (which involved BTCC, OKCoin, and Huobi).
The Optimistic 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 explanation why the cryptocurrency has been a huge spike.
“It is not clear why cryptocurrencies are appreciating so rapidly (apart from the appreciation itself drawing in more speculation against a potentially inefficient ability to sell),” the bank stated 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 provide investors digital tokens in exchange for money. Some companies 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 attractive in the country to get away from such limits, according to Morgan Stanley analysts.
Finally, the increased investment funds in Japan and Korea also contributed to the rise of the cryptocurrency. Morgan Stanley talks about 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.”