Category Archives: Goldman Sachs

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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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‘Global Cryptocurrency’ Coming, Says Ex-Trump Advisor Gary Cohn

Former Goldman Sachs executive and President Donald Trump’s ex-Director of the National Economic Council, Gary Cohn, shared his positive views on blockchain technology while predicting a future global cryptocurrency.

Speaking to CNBC’s Bob Pisani, Cohen shared his projection, telling him, ”I do think we will have a global cryptocurrency at some point.”

Cohen did say, however, that he does not believe Bitcoin will be the currency successful in this endeavor. “I’m not a big believer in Bitcoin,” he disclosed to Pisani.

Cohn finds fault in what he sees as Bitcoin’s inaccessibility and impractical high mining costs. For a global cryptocurrency to be successful, he regards it as necessary to not be “based on mining costs and costs of electricity and things like that”.

Speaking on the need for a more accessible currency to find success globally, Cohn said, “It will be a more easily understood cryptocurrency that will probably have some blockchain technology behind it, but it will be much more easily understood how it’s created and how it moves and how people can use it.”

Despite Cohn’s reservations about Bitcoin, he describes himself as ”a believer in blockchain technology,” the sentiment of many institutional and governmental figures in the US. Several states such as Arizona are working to instate legislation that would promote and regulate the blockchain industry while struggling to pass a bill that would allow taxes to be paid in cryptocurrencies.

CNBC’s Pisani pushed Cohen to discuss his views on Goldman Sachs’ recent decision to begin the trading of Bitcoin futures. It appeared Cohn was made uncomfortable by the question, responding somewhat defensively: “Look, they can do whatever they want. They can do whatever’s in their shareholders’ best interest.”

Goldman Sachs showing their support for Bitcoin in this form does undermine Cohn’s negative conception of the currency’s future.

Cohn left Goldman Sachs in January 2017 to join the Trump administration, leaving this position last month following reported contention with the administration regarding proposed trade tariffs on China.


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Bitcoin Price Set to Overtake All Time High Says Senior Analyst

A senior analyst at leading social trading network eToro has announced that he sees Bitcoin overtaking its all-time high of $20,000 with “absolute certainty”

Mati Greenspan, who is also a well-known bitcoin expert, told the UK’s Sunday Express that bitcoin’s January retracement was “a temporary swerve” and feels certain the trend will now be upward for the digital currency. Although he describes himself as, “not a fortune teller or anything like that,” Greenspan  suggested that “Whenever the price moves and jumps into a new order of magnitude, we need to see some sort of retracement on that.”

According to CNN, this is not the first time that analysts have compared the recent slump to the drop in 2014 when bitcoin dropped by 80% in value and then failed to recover for over a year. The market is now considerably different from its position over three years ago with a daily global trading volume of $30 million.

Greenspan is not alone in his views regarding the figure, providing that bitcoin can continue its trading volume, but some investors and analysts see the 20k target happening sooner. Billionaire investor Mike Novogratz, and Pantera Capital CEO Dan Morehead, along with other investors, see bitcoin surpassing its all-time high by the end of 2018.

The market may have benefited recently from the frequent announcements made by well-known investors about to embrace cryptocurrency trading. Also, banks beginning to express a more favorable interest in the market, such as Goldman Sachs announcement to offer bitcoin futures trading on behalf of its customers, does have an impact as well.

Goldman Sachs has said that it has no plans to initially buy and sell Bitcoin itself, but a team is looking into the possibility, provided it can gain regulatory approval and then work out a plan for eliminating risk.

In the last few days, Bitcoin Foundation founder Charlie Shrem has tweeted that May 2018 will be the “last time” bitcoin costs less than $10,000.

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Ex-Governor Says Fed Digital Currency Needs “Serious Consideration”

Kevin Warsh, former Federal Reserve (Fed) Governor has suggested that the creation of a “FedCoin” needs “serious consideration,” reports the New York Times.

The concept of a cryptocurrency called FedCoin has provoked interest over past years, based on an idea proposed in 2014 by blogger JP Koning. Since then the idea has been much discussed, and the term is now generically used to describe a Central Bank digital currency which could be overseen by the Federal Reserve, IMF, and the World Bank.

Warsh wants to bring legal activities into a “legal coin,” suggesting that digital currency is still thought of by many banks as a risk, despite major banks beginning to warm up to its adoption, such as Goldman Sachs’ recent announcement that they would start trading in bitcoin futures in the next two months.

“Most central banks have a view that these crypto-assets are clever, like guys in the garage did it and it’s kind of cool, or risky,” referring to recent frauds and coin volatility. Warsh feels that central banks should treat digital currencies as more than a novelty if people see it as the future.

Chairman of the Federal Reserve Jerome Powell, has already made some positive gestures towards blockchain — the technology behind digital currency, since his appointment earlier this year saying, ” We actually look at blockchain as something that may have significant applications in the wholesale payments part of the economy.” He went on to suggest that he could see cryptocurrencies as a “reliable unit of account” rather than just a “speculative asset,” given that the next generation of cryptocurrencies look more like money and had less volatility.

Major central banks now experimenting with digital currencies and/or blockchain are growing, including The Bank of England, the Banque de France, the People’s Bank of China, the Bank of Canada, the Central Bank of Russia and the Dutch central bank.

It remains to be seen if the Federal Reserve in the US  joins these forerunners that are currently all considering the merits and the pitfalls of issuing their own blockchain-based digital currency.

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Goldman Sachs Announces Trading of Bitcoin Futures

Wall Street giant Goldman Sachs has announced it has plans to use its own money to trade in Bitcoin futures, after a decision by the investment bank’s board of directors, according to the New York Times.

This is a major turn in direction, given the bank’s often scathing remarks about the validity of cryptocurrency. It decided on the turnaround after requests from its customers who wanted to trade in Bitcoin.

Goldman Sachs will begin using its own money to trade Bitcoin futures contracts on behalf of clients in the next few weeks, although an exact date has not been set. It will trade using its own creation, known as a non-deliverable forward.

Justin Schmidt, its newly-appointed digital asset trader, wants to trade ‘physical’ Bitcoin, but the bank will need to gain approval from the Federal Reserve before it can implement its trading desk. The New York Times reports that one issue which will need resolving is to find a way to address the risk of hacking, a problem that has befallen other Bitcoin exchanges.

According to Schmidt, the current standards for Wall Street digital currency trading as yet have not been met. Also, it does not appear that the bank is embracing the new project with huge enthusiasm, perhaps a result of Wall Street’s past skepticism. Jamie Dimon, the chief executive of JPMorgan Chase once called Bitcoin a “fraud” and many banks have referred to a Bitcoin speculative “bubble”.

However, Goldman Sachs executive Rana Yared concluding that Bitcoin was not a fraud, saying she was clear about what the bank was doing:

“I would not describe myself as a true believer who wakes up thinking Bitcoin will take over the world,” Yared said. “For almost every person involved, there has been personal skepticism brought to the table.”

Goldman Sachs has said that it has no plans to initially buy and sell Bitcoin itself but a team is looking into the possibility providing it can gain regulatory approval and then work out a plan for eliminating risk. There is a general sense that the move by the bank may lend more legitimacy to cryptocurrency as a tradeable asset.

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Barclays Quash Crypto Trading Desk Rumour But Monitor Developments

Barclays bank has confirmed that it has no plans to set up a cryptocurrency trading desk as previously rumored.

British banking giant Barclays appears to be the latest to enter the blockchain arena, with Barclays UK recently announcing a new ventures unit to study “disruptive technology”. However, despite a report from CoinDesk earlier this month indicating that Barclays was monitoring client responses to the possibility of opening a trading desk for the cryptocurrency, the bank doesn’t appear ready to take the next step, and still seems to be monitoring the space.

Barclays’ spokesman Andrew Smith said in an emailed statement last month:

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

In fact, Barclays CEO Jes Stately regards a move towards cryptocurrency as a “real challenge.” UK media outlet, Financial News, reports that the comments were made in response to shareholders’ questions, during the banks annual meeting. He commented:

“…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.”

It is exactly these activities the governments around the world are currently legislating against in order to make the cryptocurrency space both safe and fit for purpose. Stately says that the bank is looking into cryptocurrency related business, but sees the regulatory and compliance issues as something which needs addressing.

Other major banks such as JPMorgan and Goldman Sachs have expresses concerns and strong views in the past and have often been scathing about bitcoin and other digital currencies. There are, however, ex-bank executives moving towards the new financial ktechnology.  Ex-chief of JPMorgan’s global energy trading desk, Daniel Masters, has recently suggested that cryptocurrencies could no longer be ignored by central banks and governments, adding that both the story and the technology is there and it is “convincing.”

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Analyst Predicts Future of Bitcoin Trading on Wall Street

As cryptocurrencies become more widely accepted by mainstream financial institutions, former Goldman Sachs Investment banker Matt Levine predicts that the future of tradings will be on Wall Street alongside the stock exchange.

With a growing number of investors entering the cryptocurrency market with large sums of capital, banks are beginning to see the economic benefit of facilitating their investments. One of the largest banks in the UK, Barclays Plc has just taken the cue from Goldman Sachs, now offering a Bitcoin trading desk.

The trading desks are designed to help clients make the most beneficial exchanges, while only dealing with cryptocurrencies that comply with all necessary regulations. The banks offer a range of services for their clients, including lending, brokering deals, market-making, custody of finances and market research.

As Levine frames it, the more these services in the cryptocurrency market become critical to clientele, the more banks are expected to provide these services. Hedge funds managing cryptocurrency assets have become increasingly common, requiring banks to handle trades, prime brokers, and serve as custodians.

The biggest issue for banks right now is a lack of clear regulation, as they are strictly prohibited from providing any unregulated services.

Levine has said that banks may be inclined to domesticate cryptocurrency should the demand from clients be high enough. He noted that this trajectory may well be viewed unfavorably by who he describes as ”cryptocurrency true believers”, recognizing that many have adopted cryptocurrencies as a rejection of the traditional financial system.

“[They] may be disappointed if cryptocurrency trading ends up being dominated by the likes of Barclays and Goldman Sachs,” said Levine.

Bitcoin futures contracts have promoted easier entry into the market for fund managers, allowing investors to hedge Bitcoin exposure, or harness its performance with a futures product. Platforms such as CME offer what they describe as a ”cost-effective way to trade financial and commodity markets”.

Whether digital currencies will be fully adopted by big banks is still up for debate, as is how the cryptocurrency community will accept this. The market cap for digital currencies currently stands at around USD 330 billion, a number that Wall Street is surely watching.


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Goldman Sachs Exec Joins Blockchain Crypto Wallet

Cryptocurrency wallet service Blockchain announced on Tuesday that top Goldman Sachs executive Breanne Madigan would be joining the firm as head of institutional sales and strategy.

Blockchain has positioned Madigan in this role in a bid to appeal to the growing number of institutional investors choosing to begin exchanging cryptocurrencies. The market for this type of client is seen as particularly lucrative but is yet to have fully taken off.

The move by Blockchain could have been influenced by the recent news of George Soros and the Rothschilds beginning their venture into the cryptocurrency market. Powerful players such as these will be looking to invest and store their funds with the best-staffed teams.

Analysts have predicted 2018to be the year institutions will enter the market, as did former portfolio manager at the University of Chicago Ari Paul. He recently spoke to CNBC on the subject, saying: ”I do think it’s inevitable from a few angles”.

There are many institutional investors, however, that still view investment into digital currencies as particularly risky. While Bitcoin may be the most popular currency to purchase, the volatile fluctuations that have seen it drop to less than half its valued worth in December 2017. The unstable market conditions continue to deter high-investment traders.

Breanne Madigan

Madigan most recently headed the department of institutional wealth services at Goldman Sachs. Under her leadership, the division saw the total amount of assets managed at a record of USD 1.49 trillion in 2017, as reported by Blockchain.

CEO of Blockchain Peter Smith commented on her move to the firm, noting, ”Breanne has a proven track record of adding value to her teams and her clients, and as Blockchain continues to grow its institutional presence, I can think of no one better to help scale our business”.

Blockchain currently has 24 million active wallets registered on the platform. It offers a cryptocurrency wallet service similar to Coinbase.


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Bitcoin a Response to Traditional Banking Failings, Says Ex-Goldman Sachs Analyst Bernstein

Ex-Goldman Sachs economist and founder of Tetras Capital, Brendan Bernstein, recently spoke out on his belief that not only is Bitcoin not a bubble but it is, in fact, a response to the bubble created by traditional banking.

Bernstein asserted his case via a series of Tweets on Tuesday, where he focused on financial history since the 1970s. He made the claim that during a time major players such as China and the US have engineered bubbles through their central paradigm of debt.

Citing Mckinsey, Bernstein noted that since the height of the financial crisis in 2009, global debt has increased by USD 57 trillion. He sees China as particularly problematic, as its impractical focus on a 6.3% GDP growth has led debt to skyrocket. Its bank asset growth has reportedly been 450% since 2008, now reaching USD 40 trillion.

Comparatively, the US has USD 17 trillion of bank assets.

In one of his tweets, Bernstein noted the unsustainability, not in the value of Bitcoin but in global debt, bond prices and USD hegemony among other issues.

18. What’s unsustainable isn’t BTC price but instead is:

– The welfare state
– Arms race of currency devaluation
– USD hegemony
– Global debt
– Bond prices
– S&P 500 prices
– China debt
– Global peace
– Low volatility
– Political chicanery and micromanagement

— Brendan Bernstein (@BMBernstein) April 10, 2018

Turning to Bitcoin

The argument from Bernstein echoes the sentiment of analyst David Draper, who predicted Bitcoin to recover and increase its value by the end of the year as institutions begin to see the benefit of investing.

Speaking to Bitcoinist last week, he noted, ”It is logical when institutions put money into crypto because their investments are 1,000x to 10,000x bigger than the average Joe and they will rise. And institutions are going to have to put their money in Bitcoin”.

Bitcoin has still been receiving negative coverage from mainstream institutions and outlets, however. UK bank Barclays this week described Bitcoin’s volatility as an ”infectious disease”. Time magazine also described the potential legalization of Bitcoin ETF’s in the US the ”clearest sign yet the Bitcoin bubble has to burst”.

There is clearly a different paradigm of thinking between Bitcoin proponents such as Bernstein and Draper, and those championing the more traditional path of finance. This makes it a challenge for Bitcoin to receive support from the more orthodox institutions and outlets that still promote more conventional forms of banking.


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