This month, Morgan Stanley issued a report in which it performed an analysis of the cryptocurrency ecosystem.
Researchers at the Morgan Stanley Decrypted! A Crypto/Blockchain Teach-in sought answers to gain a better understanding of the underlying features of various iterations of blockchain technology, as well as the cryptocurrencies that inhabit those ecosystems. The researchers identified four big takeaways from the teach-in: the pace of development in the cryptospace is "mind boggling," seasoned players are ready to face challenges and are "self-aware of opportunities," platforms still must undergo a great deal of development before going mainstream, and incumbent investors will seek to "retain their moat."
An analysis of Bitcoin versus Ethereum blockchains pointed out the pliability of executable distributed code contracts as well as the Ethereum blockchain's ability to create a means of broad-spectrum consensus, whereas Bitcoin is only a balance of accounts. Research was also performed on Ripple and its remittance solutions suite.
Researchers also honed in on regulatory bodies such as the Department of Justice (DoJ), the Commodities Futures Trading Commission (CFTC), and the Federal Bureau of Investigation. According to the research, traditional money laundering is taking a back seat as agencies increasingly deal with cases involving digital currencies. The DoJ gives a lower priority to the challenge of tracking cryptocurrencies, favoring source work and live witnesses for evidence. The CFTC has been vague on how to classify cryptocurrencies from a regulatory standpoint but also said it "cannot be an analog regulator in a digital world."
The perspective of the research indicates rules that stifle innovation in the space are unlikely to be handed down by regulators, but also that the CFTC will seek to pro-actively engage the FinTech industry and seek to utilize blockchain technology in its own way to benefit the agency.
Morgan Stanley intends to do business involving companies it performed research on, and the report readily discloses that this may potentially have contributed to bias; the company also holds a favorable view on cryptocurrencies, as reflected in statements Morgan Stanley CEO James Gorman recently made, which contradicted inflammatory remarks about bitcoin made by JP Morgan CEO Jamie Dimon.