Investors seem to be running from the hills when it comes to State Street and BNY Mellon, both of which have large clearing and custody businesses. Both firms also use rehypothecation strategies (lending stocks to those who want to short). Both firms also earn the spread on what they collect from interest they receive on cash on deposit, relative to what they pay investors. Although net interest income rose, it fell short of analyst targets.
A more unclear future is around the concept and proofs of Blockchain. Ripple just won against the SEC that Ripple is not a security when it comes to retail investors (they did deem Ripple a security when sold to an institutional investor). This puts up a unique curtain divide in the Blockchain world when it comes to working with retail investors, as opposed to institutional investors. This may not bode as well for large players like BlackRock and Fidelity, who want to make Bitcoin ETF products for retail investors, and could put up a large "great wall" between retail and institutional investors. FinTech has already been scheming for years to figure out ways to tame and control Blockchain technology. The Ripple news makes that story that much harder for the big players.
As an observer, I hold no crypto products personally, and I continue to watch Central Bankers face a Houdini like challenge to wiggle their way out of this straight jacket they are in. I can see the inherent value in Blockchain, and how it could allow retail investors to completely bypass these Wall Street behemoths that few talk about (let's face it, State Street and BNY Mellon are not household names). But for the time being, there are too many players, the market is still too immature, and there are too many unknown unknowns to know who will overcome in the end. For that, we continue to watch the story unfold!
Have a blessed weekend,
Silence DoGood
@familyman20181
☕✝️
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