Back on December 22, in “Goldman Shows Up A Day Late And Way Short To The Bitcoin Party,” we said the following about the extent to which Wall Street has found itself in a rather unfamiliar position vis-à-vis Bitcoin:

Of course the irony here is that under normal circumstances, Wall Street is not only first when it comes to dealing in financial weapons of mass destruction, they’re historically the creators of the WMDs. This time, they’re playing catch-up on something they didn’t create, don’t fully understand, and have thus far missed out on completely.

That sets the stage for a mad dash into the digital void and when you start combining cryptocurrencies with prop trading, flow trading, and systematic execution you’ve got a recipe for all kinds of insanity. If you thought the chat transcripts from previous rigging operations were egregious, just wait until someone gets ahold of the WhatsApp messages from the new breed of Wall Street crypto prop traders.

This comes at a particularly interesting time – especially for Goldman (GS). Wall Street has seen trading revenue plunge thanks in no small part to the absence of volatility across markets. In Goldman’s case, the firm’s storied commodities business has had a particularly rough go of it, and that’s made all kinds of headlines over the last nine months.

So there’s a certain extent to which cryptocurrencies could represent a kind of new frontier – there’s no shortage of vol. in the space and client interest is running at a fever pitch, reportedly prompting some commodities veterans to contemplate taking the plunge in an effort to reclaim lost glory.

But this comes with considerable risk. If you’re the first to the party among blue chip banks and things go fine, well then you’re the proverbial “smartest guys in the room.” But if something goes wrong, well then you’re the bank that decided to get into stupid-ass cryptocurrencies.