By
Chimamanda U. Martha
April 19th, 2024
Despite the already dampened sentiments that were compounded by FTX, McDermott said Goldman Sachs sees long-term potential in the industry because of its underlying technology.
American multinational investment banking giant, Goldman Sachs Group Inc (NYSE: GS) is reportedly on track to invest tens of millions of dollars into crypto firms that are currently distressed amid the FTX implosion.
According to an exclusive report from Reuters, citing comments from Mathew McDermott, Goldman’s head of digital assets, the current sentiment in the industry and the effect on startups has carved out many unique deals that have become quite enticing to banks.
McDermott was silent on the exact amount the company plans to inject into proposed investments.
“We do see some really interesting opportunities, priced much more sensibly,” McDermott said.
The collapse of FTX Derivatives Exchange following an earlier revelation of its wobbled financials and unethical links with its sister firm, Alameda Research has broken investors’ trust in the industry. Notably, more investors are gearing up for the coming avalanche as the contagion of the FTX implosion has continued to spread to firms like BlockFi and Genesis.
In all, corporate investors are now looking to regulated and established banking firms with crypto offerings to continue their trading activities. McDermott confirmed this trend, saying the trading volume recorded by his unit since the FTX bankruptcy was made public has grown remarkably.
“What’s increased is the number of financial institutions wanting to trade with us,” he said. “I suspect a number of them traded with FTX, but I can’t say that with cast iron certainty.”
Despite the already dampened sentiments that were compounded by FTX, McDermott said Goldman Sachs sees long-term potential in the industry because of its underlying technology.
“It’s definitely set the market back in terms of sentiment, there’s absolutely no doubt of that,” McDermott said. “FTX was a poster child in many parts of the ecosystem. But to reiterate, the underlying technology continues to perform.”
Besides Goldman Sachs, Other Banks Have Different Stances on Crypto
That Goldman Sachs is bullish on crypto and is ready to do all it can to capitalize on the current situation is not a push that is unique across the board. At this time, there is a mixed sentiment among the top banks and financial institutions on how to approach crypto assets.
Just like Goldman Sachs, banks like Morgan Stanley (NYSE: MS) and HSBC Holdings Plc (LON: HSBA) have a more skeptical stance on crypto. Despite the growing demand for crypto products and services from the public, HSBC CEO Noel Quinn said emphatically that the bank has no plans to offer any form of crypto trading or investment activities to its retail customers.
Unlike the bank, however, Britannia Financial Group, a London-based financial services provider is gradually building up its crypto unit, drawing on the long-term potential it sees for the industry.
“We have seen more client interest since the demise of FTX,” he said. “Customers have lost trust in some of the younger businesses in the sector that purely do crypto, and are looking for more trusted counterparties.”