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Goldman Sachs Denies Plans for Crypto Trading Desk

Goldman Sachs Denies Plans for Crypto Trading Desk

David Solomon, the CEO of Goldman Sachs, has denied that the bank had ever made any plans for a cryptocurrency trading desk, claiming that earlier press coverage indicating otherwise had been incorrect in their reporting.

Solomon made these remarks at a hearing before the US House of Representatives Financial Services Committee this week. The Committee was holding a hearing for ‘Holding Megabanks Accountable: A Review of Global Systemically Important Banks 10 years after the Financial Crisis’.

Back in 2017, Bloomberg first broke the news about the bank’s supposed plans to open a unit focused on crypto trading in 2018, and by September, Business Insider was informed that the project was on hold and that a Bitcoin derivative was also being considered. Chief financial officer Martin Chavez would later dismiss these reports as “fake news”.

Solomon told the hearing that Goldman Sachs has engaged with clients involved in clearing physically-settled crypto futures, but flatly denied the plans for a crypto trading desk:

“The first [Bloomberg article] wasn’t correct. Like others, we are watching and […] doing work to try to understand the cryptocurrency market as it develops […] but we never had plans to open a cryptocurrency trading desk… We might at some point in time, but there’s no question, when you’re dealing with cryptocurrency, it’s a new area […] it is unclear from a regulatory perspective, it’s unclear whether […] in the long run, as a currency, those technologies are going to work and be viable.”

Ohio Republican Congressman Warren Davidson, who was questioning Solomon over the media reports, himself voiced his belief that the U.S. is lagging behind other countries and failing to “take advantage of this thriving sector [crypto]” due to regulatory uncertainty.

As Cointelegraph previously reported, other CEOs in attendance at the hearing included JPMorgan Chase CEO Jamie Dimon, who affirmed the value of blockchain technology but reiterated his belief that decentralized cryptocurrencies do not have any intrinsic value.

This week, a bill to exclude crypto from being classified as securities and foster more regulatory clarity was revised and reintroduced to Congress.

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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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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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