Category Archives: Goldman Sachs

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Could Wall Street Banks Become Crypto Custody Specialists?

Wall Street banks are slowly beginning to consider crypto custody as another mainstream service.

This, despite the occasional dig at crypto from the big players on Wall Street such as Goldman Sachs recent “cryptocurrency mania” comment last week citing it as one of the top risks for the market, even though the very same bank is dipping into Bitcoin derivatives on behalf of its fund manager clients.

The above service offered by Goldman Sachs may well be client-driven but behind the usual anti-crypto spin, a different picture can be detected after a bit of surface scratching. The Financial Times suggests that “trendy young crypto-types” are the new kids on the Wall Street financial block, although what crypto-related products will come from these young brains is still to be revealed. However, the trend is very much toward research and crypto is the name on the tip of everyone’s tongues.

Analysts are suggesting that the new frontier on Wall Street could well be cryptocurrency assets custody; looking after customer’s cryptocurrency funds. At the back of this are fees, another way the bank can make money out of cryptocurrency without dabbling themselves. In this way, billions of dollars held in custody by the banks can be another payday for the big names on Wall Street.

Recent Bitcoin News reports have illustrated some of the problems of safe storage of cryptocurrency assets, which vary in degrees of complexity from multiple vaults with random back up keys to Swiss Bunkers carved into the sides of mountains. Thus, there is clearly scope for bank intervention on behalf of clients.

Reportedly, forerunners in this new race are New York City-based ItBit, Gemini and more lately Goldman Sachs and JPMorgan now lining up to offer their services. Others are Japanese broker Nomara and notably the Swiss Stock Exchange part-owned by the 130-bank SIX group conglomerate.

Sam Mcingvale, San Francisco-based head of Coinbase Custody suggest that his company is joining the custody fray with plans to cold-store USD 5 billion of institutional crypto assets by the end 2018. Customers need these services, he argues:

“People were saying: “Hey, we’re already holding Bitcoin with you, we trust you, but we need more; we need a regulatory component, we need monthly statements, we need a different type of insurance.”

 

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Goldman Sachs Crypto Custodial Services May Be Just Around the Corner

Reports have suggested that Goldman Sachs is considering offering crypto custodial services for clients.

Rumors abound surrounding some of the larger Wall Street banks and their various flirtations with cryptocurrencies making it difficult to tie down what is actually in the pipeline. The latest unconfirmed story is that Goldman Sachs is venturing into crypto custody for its client’s benefit.

If this the case, it probably shouldn’t be totally unexpected, given recent activities at the bank after the recent change in leadership in Lloyd Blankfein’s replacement, David Solomon.

Solomon has been with Goldman Sachs since 2006, working his way from the joint head of the investment banking division, to the chief operations officer in 2016. Last month, he shared the news that the New York-based investment bank was expanding its cryptocurrency services offered to clients. He has publicly discussed the financial benefits of cryptocurrency trading,

The man who produces and DJs electronic dance music under the stage name DJ D-Sol has clearly already made an impression, although crypto seems to be an undercurrent flowing through the bank waiting for the right moment to emerge. Christopher Matta, co-founder of Crescent Crypto Asset Management and a former VP at Sachs, once famously said that he would invest his mother’s money into Bitcoin.

Reportedly, the plan is to take the next step after announcing Bitcoin futures to fulfill Solomon’s target for Sachs to “evolve its business and adapt to the environment” by offering a much-needed service for its clients. The new requirement for bank clients with cryptocurrency assets is to have somewhere safe to store their currency.

Although the bank hasn’t announced any action following hints that it was setting up a Bitcoin trading desk, this would be a step down that road. This would inject further confidence into a rather deflated crypto environment at present with the news that a big name such as Goldman Sachs had become a custodial bank for crypto assets. The bank’s response to the rumors was:

“In response to client interest in various digital products we are exploring how best to serve them in this space. At this point, we have not reached a conclusion on the scope of our digital asset offering.”

 

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UK Bank Barclays Could Be Tapping into Crypto

It has been reported that UK bank Barclays has been looking into the possibility of opening a trading desk.

Three months is a long time in cryptocurrency circles. Bitcoin News ran a story in May suggesting that the bank had no such plans and would continue to monitor clients. Barclays spokesman Andrew Smith in an emailed statement in April commented:

“We constantly monitor developments in the digital currency space and will continue to have a dialogue with our clients on their needs and intentions in this market.”

Cryptocurrencies presented a “real challenge” earlier in the year for Barclays CEO Jes Stately who was said to have suggested at a shareholder’s questions session:

“…on the one hand, there is the innovative side of it and wanting to stay in the forefront of technology’s improvement in finance… On the other side of it, there is the possibility of cryptocurrencies being used for activities that the bank wants to have no part of.”

Barclays may still not want to have a part in these “activities” but there is activity happening at the bank, according to reports. The former head of trading at Barclays has a new position, now entitled ‘Head of Digital Assets Project: Barclays Investment Bank’, while the director of oil options trading at the bank, Matthieu Jobbe Duval, is now ‘Digital Assets trading – Consultant at Barclays’.

The implications are clear if these titles represent anything, and illustrates that Barclays has moved on since the May statements. Duval suggests that Barclays:

“Hired him to produce a business plan for integrating a digital assets trading desk into [the bank’s] markets business revenue opportunity, competitive landscape, budgeting and planning for delivery, IT buildout, capital and balance sheet impact.”

Business Insider, who ran the original story, said that a bank representative denied that any such project existed and crypto trading was not planned.

Other major banks Goldman Sachs and JPMorgan Chase have admitted to some cryptocurrency interest, with Goldman soon to open a desk after client pressure and JP Morgan at least building a team with boss Jamie Dimon almost conciliatory after scathing crypto comments last year.

 

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Wall Street Crypto Interest Continues as Fundstrat Accepts Bitcoin

Leading independent Wall Street research organization Fundstrat has announced that it is about to start accepting Bitcoin from global clients.

The trend in Wall Street currently seems split between joiners and leavers, those such as banking giant Goldman Sachs who, having listened to its client base, has demonstrated that it has seen the writing on the wall regarding cryptocurrency, and those leaving comfortable positions in banking to jump on the blockchain bandwagon wholeheartedly.

Those such as JP Morgan blockchain executives Amber Baldet who left to found her own decentralized app store and ex-vice president of Goldman Sachs who jumped ship to fire up a crypto asset management firm, both examples of the current lure of crypto and blockchain on Wall Street.

Fundstrat Global Advisers have decided to become joiners in its announcement that the firm will start accepting Bitcoin payments through Bitpay, the largest global blockchain payments provider. Reportedly, the organization is one of the few macro research firms to follow movements in the crypto environments and has decided to take the plunge. Managing Partner Thomas Lee commented on the move:

“Fundstrat found that accepting payments via BitPay is considerably simpler, faster and less expensive than bank wires… Bitcoin payments make it easier for our clients, particularly those outside the US, by offering more options to pay for our research services without having to deal with the hassles of currency translation.”

Its clients include institutional investors, wealth advisers, pension funds, and wealthy individuals requesting investment reports and profiles including cryptocurrency.

And it is not just Bitcoin that Wall Street is currently taking an increased interest in. Last month’s comments by SEC Director of Corporate Finance William Hinman that Ether wasn’t operating as a security has left its impact on New York’s financial hub, with CBoE’s president Chris Concannon declaring:

“We are pleased with the SEC’s decision to provide clarity with respect to current Ether transactions… This announcement clears a key stumbling block for Ether futures, the case for which we’ve been considering since we launched the first Bitcoin futures in December 2017.”

 

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Nasdaq Talks Over the Future of Crypto in Private Meeting

Unconfirmed reports indicate that Nasdaq held a closed-door meeting with half a dozen various companies this weekend in order to discuss amongst other topics, the integration of cryptocurrency into global markets.

That the individuals behind the second largest stock exchange in the world (by market capitalization) should be discussing cryptocurrency at this stage is not surprising. Earlier this year the exchange suggested that it could foresee opening its own cryptocurrency exchange in the future.

During an interview with CNBC, Nasdaq President and CEO Adena T Friedman raised the idea that Nasdaq would consider venturing in the crypto sector. She remarked:

“Certainly, Nasdaq would consider becoming a crypto exchange over time…I believe that digital currencies will continue to persist it’s just a matter of how long it will take for that space to mature.”

The companies at this particular meeting were said to included prominent cryptocurrency firms such as the Winklevoss owned Gemini Exchange. The brothers appearing just days after their ETF proposals being rejected at the SEC.

Blomberg attempted to get further details but Nasdaq simply verified the meeting. However, the unnamed source suggested that topics discussed included regulation and tools to measure the development of the industry and the likelihood of the members at the meeting having further discussions soon.

Larger institutions have been far more prominent in discussing the cryptocurrency industry this year and banking institutions on Wall St are at various stages in addressing where to position themselves in the market. Of which, some of them like the Goldman Sachs have taken a proactive stance in this regard.

CNBC’s Brian Kelly suggests that the addition of the New York Stock Exchange (NYSE) and Goldman Sachs to the crypto status quo will cause the market to surge. Nasdaq President Freidman suggests waiting for cryptocurrencies to “mature,” but other major exchanges around the world are clearly thinking of making the move early.

Earlier this year Freidman said of cryptocurrencies

“I think the technology is fascinating and it’s a very sound technology. It’s just a matter of making sure that the community is all-embracing it together.”

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Can Blockchain Impact the Future of Real Estate?

With increasing reports of both Bitcoin and Ethereum being used to purchase property, it appears that digital currency is finding its place in the Real estate sector.

Although a recent Bitcoin News report illustrates that some banks are not prepared to allow customers to use mortgage equity to purchase cryptocurrencies, it is clear that real estate agents are not adverse to taking investors’ digital funds in exchange for bricks and mortar.

A recent article by the Washington Post revealed that in the US, a Miami penthouse listed at the time for 33 Bitcoin carried the stipulation that the client would not take any other form of currency. In the UK buying property using Bitcoin is far rarer. In fact, Bitcoin News recently reported that a Harris survey revealed that 27% of male millennials considered Bitcoin to be a better long-term investment than buying a property, assuming that they were even able to get on to the housing ladder.

It appears that buying property using cryptocurrency is more limited to groups that have made substantial profits trading the digital currency; the crypto “nouveau riche.” In the US the buying of real estate using currencies such as Bitcoin is far more widely accepted and new concepts are beginning to facilitate sales in innovative ways.

Longstanding real estate and private equity firm, Muirfield Investment Partners, have joined with the company in an attempt to use blockchain to introduce more liquidity to the real estate market by developing a token which can be freely traded, whilst remaining compliant with US security laws. Thomas J Zaccagnino, Muirfield’s founder, commented, “By tokenizing a real estate investment vehicle, investors are for the first time, able to freely trade their ownership on regulated secondary exchanges.”

Blockchain itself has become a boon to the industry with numerous applications. According to the Washington Post, in 2016 Goldman-Sachs projected a $2-$4 billion savings in the title insurance industry as a result of using blockchain to verify and store land titling. This said blockchain is not the only solution to finding cheap, speedy, solutions to recording land and property ownership.

The Post suggests that DLT can’t detect a forgery nor will it detect a foreclosure issue, which effectively means that such titles can’t be marketed, indicating that despite DLT’s effectiveness in real estate transactions, it does have its limitations, in that it can’t necessarily offer buyers title insurance.

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Cryptocurrencies Are Helping Venezuela’s Poor as Conditions Worsen

A Venezuelan, using the alias “Hector” to protect his identity, has spoken out against the Madura regime illustrating how the country’s poor is increasingly relying on cryptocurrency for survival, writes Bitcoin magazine.

As Bitcoin News reported recently hyperinflation is rampant in Venezuela and as a result, Bitcoin trading volume keeps hitting new records each week. Meanwhile, authorities are scratching their heads on how to rein in the burgeoning, albeit underground industry, including attempts to crackdown on the import of cryptocurrency mining equipment.

Despite the government’s recent social projects to support student programs through crypto mining at schools and universities, and the building of more than 2 million homes for the homeless, paid for by the Petro, Venezuela’s economy continues to suffer.

The country’s poor have found Bitcoin to be a foil for the country’s hyperinflation which at last count had reached $18000 percent, creating a bizarre situation where locals are now making carrier bags out of the national currency, the bolivar, in order to carry their money in for making a shopping trip.

Hector realized that Bitcoin was the way out of total poverty when he recently received 0.5 nano as a gift, at the time worth $1.80, which was more money than he had made in a month. Four days later Hector saw his money swell after informing the community that he now had opened a wallet. He discovered he had amassed 360.68 nano (nearly$950 at time of press) which allowed him to buy 224 lbs of food for just 29 nano, according to Reddit.

Hector’s story is becoming typical, as Venezuelans turn to cryptocurrency. He explained:

“We were almost running out of food some days ago; it was common for that to happen every six or seven days after getting paid. With the 3 NANO (around $8 USD) we were able to buy food for the whole week and that’s only something to be very happy about, something that doesn’t happen very often.”

As Hector went on to explain, Facebook has become a medium which now attracts thousands of people discussing airdrops, with foreign nationals increasingly becoming involved in these types of benevolent activities. Former Goldman Sachs employee turned developer Jonathan Wheeler recently announced plans to help Venezuelans get their hands on Bitcoin via his massive airdrop and has assembled a team of foreign nationals and Venezuelans to make it successful, even quitting his job in the city. He explained:

“To give it the greatest likelihood of success, it has to be done en masse. We’re trying to make this a large-scale collaborative mission to help people suffering from financial tyranny.”

Hector has the last word, thanking all those that are working towards making the lives of Venezuela’s poor a more positive one. He said:

“Venezuela is what a country with almost zero economic freedom looks like, and many are at risk of ending up like us. One important focus the cryptocurrency community has is to fight for our freedom and I congratulate you guys for standing for what is yours.”

 

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Goldman Sachs Considering Crypto Trading Services

The chief operating officer of Goldman Sachs, David Solomon, said clients are asking to trade cryptocurrency so the firm is holding discussions to consider that possibility. He says Goldman Sachs must “evolve its business and adapt to the environment”.

Goldman Sachs is a multinational investment bank headquartered in New York City that offers asset and investment management services. It is among the top nine largest banks in the world with assets of nearly USD 1 trillion and annual profits in excess of USD 10 billion. Goldman Sachs’ assets are three times more than the entire cryptocurrency market cap of USD 290 billion.

If Goldman Sachs starts to actively trade cryptocurrency for its clients, it has the potential to attract large amounts of institutional money into the cryptocurrency market, which could easily spark a rally.

Goldman Sachs was one of the first firms to participate in clearing Bitcoin futures contracts, after Bitcoin futures trading launched on the Chicago Mercantile Exchange and the Chicago Board Options Exchange in December 2017. In May 2018 Goldman Sachs confirmed that it would be launching a Bitcoin trading desk, perhaps to conduct over-the-counter (OTC) trading like some other big financial firms have experimented with.

Although Goldman Sachs hasn’t officially been involved with cryptocurrency trading, it did invest USD 50 million into Circle in April 2015, which has become a large and profitable cryptocurrency exchange in the United States. Circle facilitates the trading of several major cryptocurrencies and acquired Poloniex in February 2018, which offers dozens of different cryptocurrency trading pairs. Therefore, Goldman Sachs is indirectly involved in and profiting from a wide spectrum of cryptocurrency trading activity.

 

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Wall St Millennials Crack Crypto Fortunes: Banker Starts New Life Firewalking

Millennials are leaving behind the world of private equity and hedge funds, and jumping off the Wall Street merry-go-round for a new life because they’ve already made their money on cryptocurrency, writes EFC.

At least three staff members at New York’s Goldman Sachs have reported that it was time to move and start a new life, having made their own crypto fortunes, reports Bloomberg. Both Johnathan Cheesman, 36, and Justin Saslaw, a sprightly 28, have quit having made their money on trading and taking advantages of the crypto markets’ fluctuating fortunes.

Senior banker Jamie Dimon, who now regrets calling Bitcoin a fraud, is now forced to watch as those lower down the pecking order make enough money from cryptocurrency dealing to leave the security of a day job for pastures new. In March, Adrian Xinli Zhang became a director at Deutsche Bank in New York aged just 29, but was gone in a month after trading Bitcoin in his spare time, sources told Bloomberg.

BlackRock staff member Asim Ahmad put everything into Ether when he had the chance, using all of his life savings to invest in the digital currency, but has now left his London office to start anew on the back of his crypto profits. Asim commented:

“I’m in a position where it doesn’t make sense to work at BlackRock anymore… The one-day volatility of my portfolio is higher than my salary, so if I get a few investments right then I’ll have made the same as my yearly wage and everything else on top is a bonus.”

Zhang is reportedly working on a trading platform for digital assets, while Ahmad helps manage a fund that invests in blockchain businesses.

Why then, are millennials reaching these dizzy heights? Adam Grimsley, co-founder of crypto hedge fund Prime Factor Capital, suggests why a crypto generation gap among finance professionals certainly appears to be opening up.

“The youngsters may have less intellectual baggage and may be more open-minded, but they also have less responsibility for managing risk and working out the practicalities of bolting on crypto to the existing business.”

Grimsley adds, “You’ve seen a bifurcation internally at many larger houses where senior managers are very skeptical about crypto, while graduates and younger team members are very positive.”

Not all stay within the boundaries of the space that made them their fortunes. After more than 20 years working at HSBC and as a CEO for a while, Julius Cardoza now runs a London life coaching firm, with HSBC now one of his clients. One of his training program exercises is to get his clients to perilously walk over hot coals.

“Firewalking is transformational for the rest of your life because after that there’s nothing you’re frightened of because you have already tested yourself to the limits of what you think you can achieve,” he explains.

 

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Digital US Dollar Launched by Goldman Sachs-Backed Startup

A new cryptocurrency by fintech startup Circle, a company backed by Wall Street giant Goldman Sachs, is aiming to be a digital version of the US dollar, writes the Independent.

Circle has announced that the new USD Coin will be free from volatility issues due to it being pegged to US dollar, offering it a stable value in order for it to be used as a working currency, rather than just an investment tool, the company says. Circle also claim it will be a faster and more secure version of the US dollar.

The underlying technology behind the proposed USD Coin will not be decentralized peer to peer, as it’s backed by fiat currency and released by a major financial institution, although it will be an electronic cash system, according to the company.  People will also not be able to mine the USD Coin in the same way other cryptocurrencies can be generated, as the only way to acquire them is to buy them.

It is the second cryptocurrency-related announcement from Goldman Sachs in the space of a month, following news that the bank had plans to open its own crypto trading desk on behalf of its clients. The startup clearly views the backing of Sachs as a huge driver of the project, commenting on its blog post:

“Existing fiat-backed approaches have lacked financial and operational transparency, have operated in unregulated jurisdictions with unknown banking and audit partners, and have been built as closed-loop ecosystems and closed proprietary technologies.”

Matthew Newton, analyst at crypto retailer eToro, sees the move as inevitable, suggesting that this has been coming:

“This shouldn’t come as a huge surprise to anyone who has been paying attention to cryptocurrencies over the last 18 months. Any forward-looking financial institution needs to understand this technology and accept its enormous potential.”

Newton goes on to argue that big banks have been investing in research and development of blockchain and cryptocurrency for some time. The trading platform will be the first of any major Wall Street institution and is expected to add further legitimacy, particularly following so close after Goldman Sach’s Bitcoin futures announcement last month.

There is a suggestion that the company may announce cryptocurrencies tied to other traditional currencies in the future, such as the pound and the euro.

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