Goldman Sachs, an investment banking giant recently hired a VP for its cryptocurrency clients but denies opening a crypto trading platform. This is certainly a positive turn to the bank’s previous stance on cryptocurrencies where it considered them a business risk.
Goldman made its first for the digital asset market unit
Finally, Goldman Sachs has made its entry into the cryptocurrency market by hiring the first crypto trader. The Wall Street bank has hired Justin Schmidt who is a former trader as the vice president and the head of digital assets market in the securities division of Goldman Sachs.
Having said that, crypto industry people believe that the bank is planning its crypto trading desk. Now, with its first hire in crypto market unit, the bank seems certainly serious about helping its clients that are interested in investing in virtual currencies. It can also be seen as a progress in building a team for the same. Since December 2017, the rumors have been running amok.
The hiring that drew a debate over if the bank is launching an OTC crypto trading desk or not, is now put to rest as the spokeswoman at Goldman Sachs, Tiffany Galvin denies that for now, stating:
“In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering.”
Unlike Goldman Sachs role in the mainstream financial sector, the bank will be simply helping its customers that are interested in digital currencies. In December, the bank was the first one to clear CME and Cboe bitcoin futures for its clients. Goldman Sachs basically provides its customers the exposure to bitcoin through these bitcoin futures by playing the role of a middleman.
After claiming cryptos a business risk, Goldman enters into crypto market
Though not directly, Goldman Sachs does own a crypto trading desk indirectly through Circle. The bank has a minority ownership in the fintech startup that has launched a number of crypto products along with an OTC trading desk.
Recently, Circle increased its minimum order size of bitcoin trades for its over-the-counter marketplace. The trading desk of the company that processes over $2 billion in trades every month, has put the minimum limit to $500,000 which is more than 100 percent of its previous amount.
The CEO of Circle, Jeremy Allaire stated that OTC order size has gone through a surge since January 2018 despite the lower trading volume on retail exchanges.
In February, this year only, Steve Strongin, the head of Global Investment Research at Goldman Sachs said cryptocurrencies will fall to zero:
“Whether any of today’s cryptocurrencies will survive over the long run seems unlikely to me, although parts of them may evolve and survive. Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.”
The Company also stated sometime back:
“We may be, or may become, exposed to risks related to distributed ledger technology through our facilitation of clients’ activities involving financial products linked to distributed ledger technology, such as blockchain or cryptocurrencies, our investments in companies that seek to develop platforms based on distributed ledger technology, and the use of distributed ledger technology by third-party vendors, clients, counterparties, clearing houses and other financial intermediaries.”
Looks like, Goldman Sachs has not only changed its stance on cryptocurrencies but become serious about the market.
Do you think, despite claiming not to, the bank will saw the potential of crypto market and will launch the trading desk?