- Goldman Sachs offers Bitcoin-collateralized loan as more Wall Street heavyweights get in on cryptocurrencies.
- Financial institutions are finding the cryptocurrency sector too lucrative to ignore and the list of Wall Street firms throwing their hat in the ring is growing.
It’s something that’s been available for the longest time in the cryptocurrency world – a loan backed by Bitcoin.
Whether it’s been through decentralized exchanges, where loans are completely managed by smart contracts and overcollateralized because of the absence of counterparty identification or credit checks, or through centralized exchanges which will loan out your Bitcoin to traders, borrowing against your Bitcoin is not new.
Borrowing against Bitcoin from a Wall Street bank however is an entirely different matter altogether and so when a name as storied as Goldman Sachs (-4.06%) launched its first Bitcoin-backed loan last week, it was a big deal.
Wall Street has long had a love-hate relationship with Bitcoin, it’s loved to hate on it and not so long ago, JPMorgan Chase CEO Jamie Dimon declaring that the cryptocurrency was a “fraud,” while simultaneously giving his clients what they wanted.
And that appears to be precisely what Goldman Sachs is determined to do, making available Bitcoin-backed loans as the ranks of the growing crypto-rich community continue to swell and Wall Street gets its own bout of FOMO for not properly catering to them.
Goldman Sachs had traded its first over-the-counter Bitcoin options in March and while it has had an abortive start-stop relationship with cryptocurrencies, appears to have finally committed to the sector, which is becoming increasingly crowded with competitors.
Like sharks smelling blood in the water, some of Wall Street’s biggest names are also diving into cryptocurrencies, to ensure they establish a beachhead should the industry continue to grow.
Last week, Jefferies Financial Group announced that it was expanding banking services to its cryptocurrency clients, a segment of the business world that had long been shunned, the way that banks don’t do business with cannabis companies.
And the world’s largest asset manager BlackRock, joined a US$400 million funding round for stablecoin firm Circle this past month, issuer of the world’s second-most favorite dollar-backed stablecoin USDC.
Away from the public though, Wall Street has long been serving the cryptocurrency sector, albeit discretely, offering everything from wealth management, to trading and investment banking and serving larger corporates appears to be the logical next step.
