Bitcoin ETFs Not Ideal for Investment Portfolios, Warns Goldman Sachs Executive

Goldman Sachs executive Sharmin Mossavar-Rahmani warned investors about Bitcoin ETFs not being an ideal investment portfolio on Friday. According to a report by The Wall Street Journal, Sharmin said digital currencies are still more like a roulette. The remarks come after Goldman Sachs was previously debating on entering the Bitcoin ETF space.

Goldman Sachs executive Sharmin cautions investors

Sharmin Mossavar-Rahmani, head of Goldman Sachs Private Wealth Management’s investment strategy group, gave a cautionary statement for investors on Friday. In the statement to The Wall Street Journal, Sharmin stated that digital currencies are still more like roulette than anything that should be in someone’s retirement account.

“It is not an investment, and people should not be investing in cryptocurrencies, in bitcoin, in the ETF, as part of an investment portfolio. However, people can use it if they want to use it for pure speculation”, they added.

Goldman Sachs’ Possible Interest in Bitcoin ETF AP

Sharmin’s remarks come after reportedly, Goldman Sachs was mulling entering the Bitcoin exchange-traded fund space. The interest pertained to a possible collaboration with two of the biggest names in finance, BlackRock and Grayscale. In the ETFs, Goldman Sachs hoped to act as an “authorized participant” (AP).

As an approved participant, Goldman Sachs would have carried out a crucial task for the ETF sector. Maintaining the alignment of ETF shares with their underlying assets is an important part of being an authorized participant. As an AP, Goldman Sachs would have also been responsible for the creation and redemption of ETF shares, ensuring their market value accurately reflects the value of their assets.

Sharmin’s remarks mimic commentary from the SEC

Sharmin Mossavar-Rahmani’s remarks are very similar to those made by SEC chair, Gary Gensler.

Gensler had previously indicated that he remains highly “skeptical” of cryptocurrencies during an interview with CNBC. “Investors should be aware that the underlying asset (cryptocurrency) is a highly speculative, volatile asset,” Gensler said.

“Amongst its use cases is really for illicit activity – money laundering and sanctions and ransomware and the like,” Gensler added in that interview.

However, Goldman Sachs has before taken a positive tone for Bitcoin ETFs. In a report, Goldman Sachs outlined the possible advantages for institutional investors in the wake of the ETF approval.

Goldman Sachs had also said that these approved products offer a mechanism for institutional investors to trade Bitcoin proxies with low management fees, encouraging greater active engagement in arbitrage schemes and options hedging, according to a study from the financial behemoth.