In stark contrast to its Wall Street peers, Goldman Sachs is emerging as the world’s largest institution to embrace bitcoin (BTC), and would soon trade the decentralized digital asset.
Goldman to Trade Bitcoin ‘Futures’
According to a New York Times report on May 2, 2018, the financial powerhouse is set to begin its bitcoin trading desk in Q2 of 2018, using its own money to trade bitcoin contracts, which correlate to the price of bitcoin.
The move marks a huge step in the right direction, as the involvement of a large-scale institution is bound to create trust and interest towards the cryptocurrency sector.
The bank would not trade “actual” bitcoins, instead, dealing in bitcoin “contracts,” offered by the likes of CBOE global markets and the crypto-exchange BitMex. Reports confirm that Goldman has appointed a team of legal experts to explore regulatory limitations and opportunities pertaining to the holding, trading, and dealing with digital assets.
However, the bank does not share similar, highly-optimistic sentiments as cryptocurrency enthusiasts, and doesn’t consider cryptocurrency as a “threat” to traditional finance.
According to Rana Yared, an executive with Goldman:
“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.”
Bitcoin Hater Turned Believer
Still, the move represents a 180 degree turn from the negative sentiments that Goldman, along with other Wall Street institutions, have voiced over the years – that bitcoin is “drug money” and is “bound to fail.” It is indeed surprising that after a few years of disbelief and rising prices the institution suddenly shows interest in the controversial asset class.
Earlier in 2017, there were several reports of institutions such as Bank of America and JPMorgan going to the extend of blocking client accounts which they suspected were used to trade cryptocurrencies.
Funnily enough, the interest shown by several Wall Street investors and banks in bitcoin goes against its inane “decentralization” ethos, which once hoped to dethrone banks from the seat of power they are in. The purpose gets abjectly defeatedly when banks take to cryptocurrency investing, presumably with no interest or comments about the underlying blockchain technology.
Jamie Dimon, the chief executive of JPMorgan Chase, famously termed bitcoin a “fraud,” and argued about its features, which “were nothing more than a speculative bubble.”
Fortunately, Yared doesn’t share the same sentiment and claims that Goldman has several interested clients who wish to invest in digital assets.
“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.’”
Amongst interested groups are hedge funds, bitcoin millionaires, and investors who seek ‘high-risk, high-reward’ trades.
A Small Step for (Gold)Man, a Giant Leap for Bit‘kind’
The decision to trade bitcoin contracts contains numerous points which Goldman would have to tackle, including the notorious price manipulation on exchanges, over which regulatory action remains scanty.
Previously, BTCManager reported Goldman’s hiring of 38-year-old Justin Schmidt, who shall spearhead the bitcoin trading division and reportedly has experience in trading cryptocurrencies on a personal level.
In spite of the various difficulties and uncertainties, Goldman’s decision is confirmed, and the world shall soon witness a major financial institution trading bitcoin futures.