Jay Biancamano, the managing director and digital currency lead at giant custodian bank State Street, has argued that crypto assets will assist the private capital market in becoming the global standard for trading within the next 10 years.
During a recent episode of The Block’s Scoop podcast, Biancamano noted that most of the inefficiencies in the present financial market are due to not being able to operate at a high level in terms of overall efficiency. Traditional securities trading is costly, and the net return or gains for most traders is a lot lower than what they’d earn if all transaction fees were subtracted, Biancamano explained.
Crypto assets provide a more efficient alternative to traditional financial instruments, and could potentially enhance the evolving private market, Biancamono argued. He noted that the US Securities and Exchange Commission’s (SEC) move to expand the scope and definition of accredited investors will create new opportunities for retail clients and make it easier for them take part in private markets.
“If you think about the access to private deals where most of the returns and issues are going on right now, the individual or the small investor has access to them. So I think when the SEC actually looked to lower the threshold for individual investors to access private deals, that was the first piece.”
He went on to mention that fractional trading will allow retail traders to enter the market, and crypto assets make it even easier to do this. Robinhood and Cash App introduced fractional trading in 2019. Charles Schwab also confirmed that it would be offering similar options.
“You could slice and dice a digital asset, much more efficiently than you could with a traditional asset.”
Biancamano noted that Morgan Stanley recently acquired giant brokerage firm E*Trade, which he believes is another strong sign that traditional institutions are focusing more on retail investors and may want to offer them better access to private investment deals.
Biancamano said he believes the private market will become the standard in the coming years, and crypto assets will serve as “the gateway to provide that because of its ability to offer smaller pieces of assets, eliminate drag, and make it much more cost-effective for these large firms to provide access to these assets to individuals.”