Goldman Sachs Group Inc. has reopened a trading desk to make markets in cryptocurrencies. The bank aims to get the business running from next week, Reuters reported today, citing people with knowledge of the strategy.
Goldman Sachs had announced similar plans back in 2018 before ditching the idea of a trading desk dedicated to crypto assets, citing regulatory uncertainty.
Having worked out security issues such as how it would custody the assets, the New York-based bank is about to begin using its own money to trade with clients in a variety of non-deliverable forwards linked to the price of Bitcoin.
The move represents another significant milestone in the asset’s mainstream adoption, which already took a giant leap forward over the last two months. The entrance by the blue-chip Wall Street firm would be the latest in a broader trend to bring digital currency into US banking. Earlier this month, BNY Mellon’s disclosure said it will soon hold, transfer and issue cryptocurrencies on behalf of its asset management clients.
According to the report, the bank has already decided where to house the desk, and the operations will likely involve the Global Markets division. Goldman Sachs is now assembling a team in New York, and the new unit could eventually operate in making markets in crypto assets as much as they do for currency or stocks instruments.
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Goldman Sachs has been clearing CBOE and CME Bitcoin futures contracts for over two years now and is providing clients liquidity for those futures. As for physical bitcoin, its top executive repeatedly said the bank appears unlikely to fully support the underlying cryptos until it has the backing of the US regulators.
David Solomon, who has been the Chief Executive Officer of the investment bank since 2018, said recently that Goldman is exploring the potential of tokenization and stablecoins as part of its efforts to modernize the legacy payment systems.
Solomon added that he might consider launching a cryptocurrency after JPMorgan Chase has become the first US bank to launch its own digital token. Quite apart from the stabelcoins, the next stage of exploration for Goldman Sachs is asset tokenization and frictionless payments.
Price swings in Bitcoin are increasing as the 6-fold jump in the value of the currency that was initially viewed as a haven for illicit activity has now captivated everyone.