By
Steve Muchoki
April 17th, 2024
Banking giant Goldman Sachs said that decision to offer Bitcoin-backed loans to clients because of its structure and 24-hour risk management, makes the deal interesting.
Wall Street giant Goldman Sachs takes a major leap in the crypto space. On Thursday, April 28, the banking giant announced that they will start a secure lending facility with Bitcoin collateralized loans. This makes Goldman Sachs the first major US bank to offer such a loans service. Besides, it will also encourage other financial institutions to offer Bitcoin-backed lending services in the market. Speaking to Bloomberg, a Goldman spokeswoman said that the “deal was interesting to Goldman because of its structure and 24-hour risk management”.
Bitcoin-backed Loans and Other Crypto Services from Goldman Sachs
In 2022, banking giant Goldman Sachs is making a strong push toward crypto. Last month, it became the first US bank to offer an over-the-counter crypto options trade for Bitcoin. For this, Goldman partnered with Galaxy Digital to execute the OTC trade.
Earlier this month, the banking giant also added that it plans to expand its OTC crypto options trading to Ethereum (ETH). Goldman Sachs said that there’s been a growing demand from its clients to offer Ethereum products. The banking giant noted that its clients see ETH as “more of an investable asset class”.
Wall Street’s Growing Appetite for Crypto
A large number of traditional financial institutions and banks have shown interest in offering crypto services. Some banks already started offering crypto custodian services over the last year. Note that crypto services offered by big financial players come under well protected regulatory environment. Thus, it significantly increases the chance of institutional participation in the crypto sector.
Bloomberg names a few of such institutions expanding their services. It adds:
“Jefferies Financial Group Inc. is expanding banking services for crypto clients, while BlackRock Inc. joined a $400 million funding round in stablecoin firm Circle this month. Boutique investment bank Cowen Inc. started a digital assets unit in March.”
Some of the major crypto services offered by Wall Street giants include “wealth management, trading and investment banking”. The next major move will be lending to companies that offer cryptocurrencies as collateral.
Recently, Goldman Sachs has reportedly entered a collaboration with the crypto exchange FTX. Here, Goldman Sachs will be extending help to FTX for regulatory compliance with the US Commodities and Futures Trading Commission (CFTC).