The Wall Street financial behemoth Goldman Sachs has unveiled its first-ever Bitcoin-backed lending facility.
As Wall Street continues to embrace digital assets, this is a big move for the investment bank. According to a bank representative, the secured lending facility provided cash collateralized by the borrower’s BTC.
According to Bloomberg, Goldman was interested in purchasing due to its structure and 24-hour risk management. The agreement allows crypto owners to get fiat currency such as USD in exchange for their crypto, but it is a first for the Wall Street bank.
Big Banks Are Getting Into Cryptocurrency:
The move indicates that large banks are warming to crypto and expanding their services to include consumers who invest in digital assets. According to the article, Goldman already has a crypto assets team and traded its first-ever over-the-counter (OTC) Bitcoin options in March, making it the first major U.S. bank.
Earlier this month, Goldman Sachs said that it would be expanding its Ethereum offering with OTC options. Ethereum’s imminent ‘Merge’ and upgrade to proof-of-stake, according to analysts at the bank, will boost demand for the commodity.
According to Mary Rich, Goldman Sachs’ global director of digital assets for private wealth management, the bank intends to follow Morgan Stanley and provide crypto investments to its private equity customers.
Mainstream banks are following the lead of more specialized firms such as Jefferies Financial Group, expanding its banking services for bitcoin users. BlackRock has made a significant investment in stablecoin issuer Circle, investing $400 million in a $400 million fundraising round.
According to Damien Vanderwilt, co-president of Galaxy Digital Holdings, accepting crypto assets as collateral is the next step beyond services like wealth management, trading, and investment banking for Wall Street banks. Silvergate Capital, a crypto-focused bank, already offers crypto collateral loans.
Foray Into Crypto by Goldman Sachs:
The Wall Street powerhouse was anything but positive about the bitcoin business until a year ago. While condemning Bitcoin, it went from having a digital asset trading platform to shutting it down years later. In one example from May 2020, the bank claimed that bitcoin is not an asset class.
A few months later, Goldman began to change its tune, employing a crypto research team, producing many optimistic studies, anticipating a $100K price tag for BTC, participating in fundraising rounds, and, probably most importantly, applying for a bitcoin ETF.