Business

Erik Gibbs

Are Goldman Sachs cryptocurrency desk plans back in play?

Goldman Sachs executives have a love-hate relationship with cryptocurrency. After word surfaced in late 2017 that the financial giant would be pursuing the launch of a cryptocurrency trading desk, it reversed course on the matter this past September. Now, just a little more than two months later, it looks like the company has, once again, flip-flopped on its decision and is contemplating a full-blown crypto trading platform that isn’t limited to just crypto futures products.

Goldman Sachs is one of the largest investment banks in the world. It has a market valuation of around $87 billion and is a highly respected financial institution. The company’s chief operating officer, David Solomon, told Bloomberg TV that it will be moving away from publicly-traded derivatives and futures, opting instead for large capacity trading.

The purpose behind the transition is to support more institutional investors and Solomon added, “We are clearing some futures around Bitcoin, talking about doing some other activities there, but it’s going very cautiously. We’re listening to our clients and trying to help our clients as they’re exploring those things too. Goldman Sachs must evolve its business and adapt to the environment.”

The statement is a bold one, and indicates the first time that someone from the company has publicly admitted that it is supporting cryptocurrencies. It is also the first time that the firm acknowledges that it plans on growing its crypto division to support increasing client demand for digital assets.

While there aren’t many traditional financial powerhouses currently involved in the crypto industry, this is changing. JPMorgan and Fidelity Investments are getting involved and an entry by Goldman Sachs could lead to further legitimacy of crypto. JPMorgan’s Nikolas Panigirtzoglou, a global market strategist, asserted that the futures market has already proven to give crypto a boost among investors and that the introduction of additional futures and exchange-traded funds will pave the way to further adoption.

This won’t happen overnight, however. A number of analysts have pointed out that stable custodianship of crypto assets is still not possible and probably won’t be until sometime later next year. The creation of a suite of institutional products for the crypto sector could go a long way in convincing large-scale institutions to dive into crypto, and products offered by Goldman Sachs, Fidelity and others would be the perfect response.

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