Goldman Sachs Retracts Bitcoin and Crypto Trading Desk Plans
Large investment bank told Business Insider that it has decided to retract its plans to launch a crypto trading desk but will focus on crypto custody until regulations develop further.
Investment bank Goldman Sachs has reportedly dropped plans to open its cryptocurrency trading desks, though it still plans to launch a custody service according to Business Insider.
Goldman Sachs shelves plans
Earlier this year, Goldman executive Rana Yared told New York Times that the bank has concluded plans to launch a cryptocurrency trading desk as they look to bring institutional investors into the market.
The firm has planned to allow clients to trade bitcoin as a non-deliverable forward, where there is no physical exchange of the underlying asset but an exchange of the currency it is quoted in — likely US dollars — on the settlement date of the forward.
Rana Yared, who was tasked with overseeing the operation, admitted back then he wasn’t completely sold on digital currencies. He added that the bank has however agreed that cryptocurrency is not a fraud.
If Goldman Sachs had gone through with its plans, it would have become the first large Wall Street firm to make markets in cryptocurrencies.
There has been interest in the market from institutions but the price swings and surging values have deterred most of them from investing.
The report cited sources close to the firm who claimed that the bank doesn’t consider opening a cryptocurrency trading desk as a priority right now, citing the lack of regulations in the market as a deterrent.
However, there are expectations that this setback is only temporary, as the sources added that the decision may be revised in the near future if the regulatory climate improves.
One of the sources stated that the bank’s executives believe that several steps have to be taken, most of them outside the firm’s control before they can make a legitimate foray into cryptocurrency trading.
Goldman Sachs to offer custody service
Despite shelving plans to open a crypto trading desk, the bank is not fully moving away from the cryptocurrency market. Goldman Sachs’ custody service will see the bank hold cryptocurrency on behalf of large clients and track its price.
Market tumble coincides with the news
The cryptocurrency market has lost over $30 billion over the past few hours. Bitcoin has lost nearly $1,000 over the past few hours.
Ethereum, meanwhile, has dropped to its lowest level since 2017, as it now trades at $225. The sudden drop in cryptocurrency prices has seen the market lose the gains it has gathered over the past few weeks.
Brian Kelly, CNBC commentator and CEO of BKCM, noted that traders are only focused on Goldman Sachs dropping cryptocurrency trading plans while forgetting that the bank will still be involved in the market through its custodial service.
He concluded that this news was the catalyst behind the sharp drop in prices.