The biggest banks in the world have done all that they can to distance themselves from Bitcoin – but not Goldman Sachs. An undeniable cornerstone of the banking sector, Goldman Sachs is seemingly going against its peers to push through plans to launch a Bitcoin trading operation.
Going against Wall Street
Wall Street has adopted a pretty aggressive anti-Bitcoin stance, so the news coming out of Goldman Sachs is certainly going to shock many. Through the opening of a trading station, it will likely lend additional legitimacy to the digital currency market. The belief is that while it’s certainly a huge positive for the world’s cryptocurrencies, it will also present some major challenges for Goldman Sachs. The bank will be using its own capital to trade with clients in a variety of contracts linked to Bitcoin’s value – so the risk is clear.
Warming up to Bitcoin
Goldman Sachs won’t be buying or selling actual Bitcoins – at least not to begin with anyway. But, the bank does have a team working on this possibility should it be able to get regulatory approval and figure out how to manage the additional risk. Rana Yared (Goldman Sachs Executive) is overseeing the project, believing that while the idea has potential, it’s impossible to ignore banking sector skepticism, “I would not describe myself as a true believer who wakes up thinking Bitcoin will take over the world. For almost every person involved [in this project], there has been personal skepticism brought to the table.”
In spite of increasing criticism, the fact that Goldman Sachs is making moves into the field of cryptocurrency is huge. This is especially true when you consider that for years Bitcoin has been battling the “criminal currency” tag that it’s been unfairly labeled with. What’s probably triggered Goldman Sachs’ interest in opening a trading station – alongside increasing client demand – has been the growing number of hedge funds that have expressed an interest in cryptocurrencies. Plus, it’s impossible to ignore the growing consumer appetite for Bitcoin, with tech companies such as square offing Bitcoin services. Chicago-based commodity exchanges have also started offering Bitcoin futures contracts to great acclaim.
Forgetting the “fraud” claims
Until now, leading financial institutions have battled against the cryptocurrency movement. This approach has led to several banks closing down or suspending accounts of Bitcoin traders. Some have even gone as far to slam Bitcoin publicly, with Jamie Dimon (JPMorgan Chase Chief Executive) calling Bitcoin a “fraud”. Goldman Sachs is changing this perception in many ways, as through its own research it has concluded that Bitcoin is a legitimate commodity. But, it has reiterated that it doesn’t believe it to have the characteristics of a currency. Effectively, Goldman Sachs is putting Bitcoin on a similar level to gold. “It resonates with us when a client says, ‘I want to hold Bitcoin or Bitcoin futures because I think it is an alternate store of value”, Yared said.
Aware of the risks
Goldman Sachs’ decision to open a trading station comes with plenty of uncertainties, but it’s clear that this represents a calculated risk for the banking superpower. It can also be argued that Goldman Sachs has been a silent backer of Bitcoin in recent times. This is because the bank has been clearing trades for customers who want to buy and sell Bitcoin futures on the Chicago Board Options Exchange and Chicago Mercantile Exchange.
Goldman Sachs backs Bitcoin
Bitcoin has been waiting for the day when a major banking sector name gives it an official stamp of approval. While this doesn’t exactly represent that, Goldman Sachs decision to open a Bitcoin trading operation proves that it’s probably closer than ever.