EXCLUSIVE: Morgan Stanley Engages GDAX As Institutional Crypto Market Maker

The deal isn’t done yet, but Coinbase/GDAX is deep in talks to assist Morgan Stanley as it builds its internal, client-focused clearing desk for cryptos. The movement has sped up over the past two weeks as Morgan Stanley has fallen behind in the headlines with respect to Goldman Sachs and others.

The conversations have been focused and the competition incredibly robust. In truth, GDAX and Gemini are locked in what looks like an epic battle to court traditional global investment banks as their clients kick and scream for services connected to cryptos. Gemini has had the lead for months, but Coinbase/GDAX is fighting back.

Morgan Stanley. according to anonymous sources on background, has been engaged with due diligence connected to a client-focused crypto desk since late 2017. The firms’ lawyers have coalesced around risk management and protecting the firm in case of a crypto market meltdown. In fact, this deal would have gotten done sooner had the extreme downside volatility not occurred in Q1 of 2018. That being said, Morgan Stanley is close to pulling the trigger and allowing the news of a GDAX ‘market maker’ to find its way into the public domain.

A second development worth noting here is this (and could potentially be bigger news than using GDAX to clear client crypto trades) – Morgan Stanley is also engaging several firms that are fashioning ‘crypto baskets’ that would look to the world like ETF’s tailor-made for crypto curious clients who are seeking diversification before dipping their toes into the volatility that is crypto.

We know of two firms that are packaging ‘crypto baskets’ with 5, 10, 25, and 50 coins at a time to ‘index’ the crypto market.

Morgan Stanley is having meetings with those firms this week.

The GDAX news in the headline, but the longer term eye opener could be the crypto ETF products that are sure to follow. Stay tuned.