Goldman Sachs May Store Bitcoin for Cryptocurrency Funds, Institutional Investors

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One of the world’s most well-known investment bank is mulling launching a custodial service to store bitcoin for investment funds that want to hold cryptocurrency.

Goldman Sachs May Custody Cryptocurrencies

Citing multiple anonymous sources familiar with the matter, Bloomberg reports that Goldman Sachs, the second-largest investment bank, is holding discussions about becoming one of the first mainstream financial institutions to custody cryptocurrency assets.

This service would be a major boon for cryptocurrency funds, but it could also have far greater implications since it would remove a major obstacle preventing institutional investors such as pensions and endowments from feeling comfortable adding cryptoassets to their portfolios.

Such custody services exist, but they have heretofore largely been offered by cryptocurrency startups such as Coinbase — not the Wall Street giants with whom institutions prefer to work.

However, Goldman has yet to publicly confirm that it is exploring a cryptocurrency custodial service.

“In response to client interest in various digital products we are exploring how best to serve them in this space,” the report cited a spokesperson for Goldman Sachs as saying. “At this point we have not reached a conclusion on the scope of our digital asset offering.”

Notably, that’s the same line that Goldman spokespeople gave in response to earlier reports that the firm was launching a bitcoin trading desk, a response it continued to issue even days before ultimately announcing that it had hired cryptocurrency trader Justin Smith to head its digital asset division and help the firm launch a crypto trading desk.

Wall Street Warms to Bitcoin

The report comes just one business day after Intercontinental Exchange (ICE) — the owner and operator of the New York Stock Exchange (NYSE) — revealed that it is launching a new subsidiary, called Bakkt, to develop cryptocurrency products and services and help bitcoin mature as a financial instrument.

Following its launch in November, Bakkt will offer a physically-settled bitcoin futures product, meaning that buyers will receive actual BTC when the one-day contracts settle rather than cash, as is the case with the bitcoin futures contracts currently available on CME and CBOE.

Since the product will offer physical settlement, ICE will have to custody the bitcoin directly, likely making it the first Wall Street firm to offer this service to institutional buyers.

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Josiah is an assistant editor at CCN. A former ancient and medieval literature teacher, he has been reporting on cryptocurrency since 2014. He lives in rural North Carolina with his wife and children. He holds investment positions in bitcoin and other large-cap cryptocurrencies. Follow him on Twitter @Y3llowb1ackbird or email him directly at josiah.wilmoth(at)ccn.com.