By
Steve Muchoki
April 18th, 2024
Goldman Sachs takes the next leap in the crypto space by allowing its clients hold Bitcoin and its derivative products.
The rise of the digital currencies has done enough in order to sway the attention of institutional players. The latest report from Thomson Reuters suggests that as the regulatory air gets more clear, big players are waiting with loads of cash to pump into the crypto space and start trading digital currency in the next 3-12 months.
According to the latest report from New York Times, Wednesday, May 2nd, Wall Street giant Goldman Sachs will be using its own funds and sponsor a variety of investment contracts that are tied to the price of Bitcoin, and over the period of time, the banking giant hopes to gradually start trading in the cryptocurrency. The first report of Goldman Sachs starting a crypto-trading desk emerged last year in December 2017.
A team from Goldman Sachs is currently working on the regulatory aspects and approval in order to figure out all the additional risks that come along with digital currencies and other similar assets. Rana Yared – a Goldman executive, is in charge of this trading operation. Yared told that many of the Goldman employees still remain skeptical on their views about the cryptocurrency.
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.”
However, the latest decision has arrived after a growing number of clients of Goldman Sachs like hedge funds, endowments, and other institutional investors expressed interest in holding Bitcoin and its derivative assets. Yared noted:
“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.’”
This decision of Goldman Sachs comes along with a lot of uncertainties, as the crypto space still remains highly unregulated and still, there are only a few measures being taken at the moment in curbing the market manipulation or extreme price volatility. After achieving its all-time high of $20000 during the mid-December 2017, Bitcoin was seen on a steep downfall earlier this year correcting more than 70% from its peak, before finally recovering in the last month of April.
The fall in Bitcoin and the overall cryptocurrency was due to the dark cloud of regulatory oversight as traders and investors started worrying about future steps the regulatory bodies could take in order to control at that time exploding crypto markets. Yared stated:
“It is not a new risk that we don’t understand. It is just a heightened risk that we need to be extra aware of here.”
Notably, Goldman Sachs is the first banking giant from the Wall Street to clear trades for its clients involved in buying or selling Bitcoin futures through the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE). The publication notes that in addition to allowing its clients to hold digital currencies, the company “will also create its own, more flexible version of a future, known as a non-deliverable forward, which it will offer to clients.”