Digital economy startup Digital Asset Holdings will allow its clients to trade financial assets using bitcoin as operating currency for cheaper, faster and fully traceable transactions, Financial Times reports. Former JPMorgan Chase & Co. executive Blythe Masters will be the CEO of the new company, overseeing employees in New York, Chicago and Tel Aviv.
This latest episode of the ongoing love story between Bitcoin and Wall Street follows a wave of announcements of new publicly traded Bitcoin financial products.
Recently, Barry Silbert’s Bitcoin Investment Trust became the first publicly traded Bitcoin fund, beating the Winklevoss Bitcoin Trust exchange-traded fund (ETF) to the finish line. MGT Capital Investments announced a reverse merger with Tera Group, which will create the first publicly traded U.S. Bitcoin derivatives exchange. Outside the United States, Crypto Facilities Ltd., a London-based broker founded by former Goldman Sachs Executive Director Timo Schlaefer, announced the launch of its Bitcoin derivatives trading platform. QuadrigaCX, Canada’s largest Bitcoin exchange, is poised to become the world’s first publicly traded bitcoin exchange.
Masters is a heavyweight in the financial world. Responsible for credit derivative products at JPMorgan, she became a managing director at 28, the youngest person to achieve that status in the firm’s history. Masters is credited with creating the modern credit default swap, a derivative used to trade credit risks.
Many observers view a seasoned financial professional such as Masters as someone who can see clearly the real value of Bitcoin and blockchain technologies to the financial establishment: cheaper transactions executed faster than traditional means and permanently recorded in a tamper-proof ledger.
“We don’t think of bitcoin as being a store of value or an alternative currency or an investment,” Masters said in an interview reported by The Wall Street Journal. “We think of it as a medium for exchange and a mechanism for recording information.”
Masters doesn’t much care for the anarchist, DIY spirit of Bitcoin early adopters. “There is a school of libertarian ‘visionaries’ who want to imagine a world without big banks, big governments,” she said. “That’s nice, but completely irrelevant to this business model. We don’t imagine a world in which big banks and big governments don’t exist.”
In fact, big governments are also warming up to the digital economy, with rumors of “Fedcoin” in the United States and some kind of “Eurocoin” in Europe, especially in financially troubled economies such as Greece’s.
Bills to allow citizens to pay taxes in bitcoin have been proposed, leading to a possible surreal transition of Bitcoin from a tax-avoidance scheme to a tamper-proof means to force citizens to pay taxes. In the meantime, the government of Ecuador is rolling out its national digital currency.
Digital Asset Holdings, founded last year by Don Wilson, the CEO of proprietary trading firm DRW Trading and Sunil Hirani, the CEO of trueEX LLC, will create bridges between the emerging Bitcoin fintech and Wall Street, and build a software platform for sophisticated financial institutions to settle trades with digital currencies and digitized versions of more traditional financial assets.
“If you can find a way to bridge the two of them then you have something that is truly revolutionary,” Masters said, calling it “the financial challenge of our time.”
Image via Sarath Kuchi.
An earlier version of this article incorrectly referred to Digital Asset Holding’s software product as a trading platform rather than a settlement platform.