Morgan Stanley: Regulation is Bitcoin's only hope

In a move sure to anger Bitcoin and other cryptocurrency enthusiasts, Morgan Stanley called on governments to tighten regulation of the digital currency in a statement Tuesday.

Morgan Stanley said in a report that many people are calling on them to invest in Bitcoin and other cryptocurrencies. However, the bank said that Bitcoin and its ecosystem need to be regulated in the future. They hope that regulators will intervene so that blockchain can be "adequately" controlled.

The investment bank also said they do not know why Bitcoin and other cryptocurrencies have grown so quickly, arguing that the hype in the cryptocurrency market has driven up prices.

The essence of Bitcoin is that it is a peer-to-peer and unregulated monetary system that allows holders to obtain a higher level of autonomy. However, the sudden rise in the value of Bitcoin has prompted speculators and large financial institutions to enter the cryptocurrency market. In addition, some traditional financial institutions have begun to pay attention to Bitcoin and other cryptocurrencies, especially Goldman Sachs Group recently made a special prediction on the price of Bitcoin.

Morgan Stanley interested in permissioned blockchain

Part of these regulations may involve Morgan Stanley's embrace of "permissioned blockchains," the bank said in a blog post last week titled "Banking on the Blockchain." They will create blockchains that only authorized people can access. This will allow them to stay ahead of the curve in the banking industry and adopt simplified regulations using blockchain technology.

The bank said in a blog post:

“Permissioned blockchain — a digital distributed ledger where authorized users can record, process and verify transactions — will simplify our operations and costs…”

Big money entering the cryptocurrency market

Morgan Stanley said that different cryptocurrencies may require tailored regulations, depending on the nature of the underlying system. However, regardless, they made it clear that government regulators are closely watching these cryptocurrencies to observe changes in this market.

The company said:

“Regulators are looking for a master key so they can see all cryptocurrency transactions.”

The nature of this statement will certainly worry the vast majority of Bitcoin holders, considering the goal of Bitcoin is to have a system that does not require government control.

Whether or not Morgan Stanley is right, Wall Street’s financial institutions have already started investing in cryptocurrencies. However, whether these institutions will continue to invest remains to be seen.