Goldman Sachs to begin bitcoin trading
A range of bitcoin price-related products will be available, with coins themselves coming later.
It might have been unthinkable a few years ago, but now Goldman Sachs, one of the biggest names on Wall Street, has said that it will start using its own funds to trade with clients in a range of contracts linked to bitcoin's price, The New York Times reports.
Initially, it won't be buying or selling actual bitcoin, but a team at the bank is examining regulatory and security hurdles that need to be overcome before they can start actually buying, selling and holding cryptocurrencies.
This is the latest development in Goldman Sachs' hot and cold relationship with bitcoin and cryptocurrencies. At the end of last year, Goldman Sachs CEO Lloyd Blankfein called bitcoin a vehicle for fraud and predicted it would collapse, deriding the idea of Goldman Sachs needing a "bitcoin strategy."
Goldman Sachs executive Rana Yared said the recent move towards cryptocurrencies was a straightforward response to client requests, rather than an indication of belief in the future of bitcoin.
"It resonates with us when a client says 'I want to hold bitcoin or bitcoin futures because I think it is an alternate store of value'," she said.
"I would not describe myself as a true believer who wakes up thinking bitcoin will take over the world. For almost every person involved, there has been personal skepticism brought to the table."
She also described the inherent volatility, and risk of complete price collapse, as an additional risk factor to be aware of, rather than a reason to stay away entirely.
This isn't Goldman Sachs' first foray into cryptocurrencies either. It's already been clearing trades for customers who want to buy and sell bitcoin futures on the Chicago Mercantile Exchange and the Chicago Board Options, which was the first major exchange to start dealing in bitcoin futures.
It's also been hiring for the space, bringing on its first "digital asset" trading expert, Justin Schmidt, two weeks ago. It didn't really have a place to put him though, and just stuck him on the foreign currency trading desk, after deciding that the closest traditional approximation to bitcoin trading was emerging market fiat currencies.
This is a role reversal from the steady flow of talent from Wall Street to crypto street in recent months.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VEN, XLM, BTC and NANO.
- Ethereum price breaks all time high of US$1,448
- Ethereum price: Massive slide as market faces bearish pressure
- Ethereum 2.0: Roadmap, timeline and implications
- Bitcoin falls to US$34,000 as confidence in money markets improves with the Biden inauguration
- Bitcoin price lags while regulators raise fears and banks grapple