Just like it was for the entire American economy, the mid-19th century was a formative period for the country’s finance industry. During this era of free banking, there were fewer regulations around the banking sector and thus saw a bunch of multinational corporations rise. Among the two most influential financial giants of America, Wells Fargo rose from a different mushrooming business of that time, express shipping.
Today, Wells Fargo is one of America’s and the world’s gigantic banking firms. The company didn’t hop from the express shipping business into banking. The co-founders had the idea of both business lines in mind right from the start, although the majority of people today believe that the California Gold Rush was the source of the firm’s early success.
The rise of Wells Fargo from the Gold Rush
Wells Fargo’s growth in the financial sector was triggered by the California Gold Rush. The news about gold discovery in a newspaper spread like bush fire in 1848 to reach all parts of the country. This discovery attracted hundreds of thousands of migrants from the west and gave birth to the trans-continental trade, which wasn’t in existence before.
This massive expansion resulted in high demand for express shipping services between California and East Coast cities. These changes also brought about an enhanced banking industry in the West. As the Northern California economy rose, the companies that served gold miners earned massive profits, a hundredfold more than the miners got.
While some were prospecting and considering the gold business as a risky venture, those who had the guts gained riches, while some profited nothing out of it. At the time, one could earn consistent profit streams by serving the miners through the sale of supplies, offering lodging to miners, shipping mail, and more.
William Fargo and Henry Wells who were working for the American Express shipping business, which they had founded together with John Butterfield, saw an opportunity rising from the California Gold Rush. The two partners seized the chance presented by the unregulated environment to expand their business.
Wells Fargo and the "Bitcoin Rush"
By viewing the history of the growth of Wells Fargo in an unregulated financial industry of the time catalyzed by the Gold Rush, we see a similar interesting opportunity for growth with Bitcoin.
And this is evident with the recent move by Wells Fargo to register a new pooled investment fund offering its affluent clients indirect Bitcoin exposure. Despite regarding BTC as 2020’s best-performing asset, the company said in a recent statement that the cryptocurrency industry is controlled by speculations instead of traditional investing. The American multinational financial company compared bitcoin to the California Gold Rush of the 1850s.
The Introduction of the FS NYDIG BITCOIN FUND I
Wells Fargo, the US's oldest bank, demonstrated something that signified a possible repeat of the Gold Rush era that made it grow to what it is today. The multinational financial firm’s filing of the "Notice of Exempt Offering of Securities," popularly known as Form D, revealed that the fund, called "FS NYDIG BITCOIN FUND I," is the incorporation of FS investments and NYDIG.
NYDIG is a financial services company, a Stone Ridge Asset Management subsidiary, with a focus on Bitcoin. The firm has expressed an active status in everything BTC, having raised over $100 million to help bring bitcoin services closer to hundreds of American banks.
FS Investment, on the other hand, is a company focused on offering asset management to help its clients get alternative income sources and growth. The firm traces its origin to 2007 and has assets worth $23 billion.
The notice reveals that Wells Fargo Clearing Services is set to receive fee payments for its placement and services for all clients referred to the fund. The company’s move towards BTC reflects the asset’s growing popularity on Wall Street, attracting other bigger multinational firms like JPMorgan Chase, Morgan Stanley, BNY Mellon, and Goldman Sachs.
Parallels Between Bitcoin and the Gold Rush
Wells Fargo’s move to join hands in facilitating the growth of FS NYDIG BITCOIN FUND I is supported by what appears to be a Bitcoin-Gold Rush similarity as listed in its latest investment strategy report. The firm pointed out that it’s surprising to learn that 2020’s best-performing asset is a cryptocurrency, with an increase of 160 percent.
Wells Fargo, however, also advised other investors who didn’t pay attention to the BTC not to feel locked out of the gains because of the mischievous price fluctuations of the asset. According to the company, despite outperforming the S&P 500 index and gold over the last three years, Bitcoin holders had to endure a turbulent journey to get to where they are today.
Despite what many investors have heard about crypto assets, many continue to refrain from purchasing them. Some even claim that cryptocurrency draws lots of attention to itself but doesn’t necessarily invite investment money.
Wells Fargo pointed out that this type of notion, however, started to take a different direction in 2020, especially with the entry of technology firms such as MicroStrategy and insurance firms getting allocations of Bitcoin worth millions of dollars.
Wells Fargo also agreed that cryptocurrencies, particularly Bitcoin, have experienced massive growth from nothing to a market capitalization worth $560 billion in 12 years. The company also admitted that BTC’s behavior now is exactly like the Gold Rush of the 1850s.
The company’s president, Darrell Cronk, in May 2021, also revealed to reporters that Wells Fargo now considers cryptocurrency to have evolved to reach the maturation of its development and is a profitable investment asset. Since then, the firm started offering its rich clients exposure to the investment opportunity.
Final Thoughts
With the Gold Rush fueled the economic growth and regulatory environment of the 1850s that gave Wells Fargo its financial growth, it’s very clear that BTC is undergoing the same experience. Currently, there exist fewer regulations imposed on the use of cryptocurrency and its growth is something that shouldn’t be disregarded.
As many multinational companies jump onto the BTC bandwagon, investors alike have demonstrated confidence in cryptocurrency. With Wells Fargo’s comparison of the Gold Rush, many entrepreneurs have also expressed an understanding of how BTC will take over the financial markets sooner.
The history of Wells Fargo presents a preview of how the world of financial services will be in decades to come. The firm’s rich history with the Gold Rush is a depiction of how a financial asset could grow within a century.
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