Banking powerhouse Goldman Sachs is all set to make its mark in the cryptocurrency space with its decision to offer a ‘full spectrum’ of crypto investments for its rich clients in the coming few months. This will make Goldman Sachs the second big bank to offer Bitcoin exposure to its wealthy clients after Morgan Stanley.
According to the exclusive CNBC reports recently aired, Mary Rich, who recently became the Global Head of Cryptocurrencies at Goldman Sachs’s wealth management division, made this announcement. She said that the bank aims to begin offering investments in Bitcoin and other asset classes in the ‘full spectrum’ either through physical Bitcoins or through traditional investment tools like derivatives.
The development comes within a few weeks after Goldman Sachs resumed its crypto trading desk and began exploring possibilities for a Bitcoin exchange-traded fund amidst Bitcoin’s recent resurgence. Bitcoin’s price has topped the $60,000 mark in mid-March, together with its circulation crossing $1 trillion. Thus, Goldman Sachs’s decision to make bitcoin available to its rich clients will serve as a market-maker by buying and selling digital assets on behalf of its clients without actively managing the digital assets themselves.
After the surge in Bitcoin price, corporates, fintech players, and institutional investors showed keen interest in Bitcoin investment, and clients started looking to Bitcoin as a hedging tool against inflation. Thus, ultimately it was the clients’ demand that won, and the bank decided to cater its private wealth management division toward the wealthiest clients, those who are willing to invest a minimum of $25 million in Bitcoin and other digital asset classes.
Until a year ago, Bitcoin‘s trade volumes and market capitalization were not so large to include big financial institutions, but with this move, big institutions are showing keen interest in Bitcoin, and Bitcoin adoption is happening much faster than expected. JPMorgan strategists have claimed that Bitcoin could be used as a hedging tool against significant fluctuations in traditional asset classes. Also, Bank of New York Mellon Corp (BNY Mellon) has declared plans to manage Bitcoins for its clients, i.e., hold, issue, and transfer crypto-assets. Other big organizations like Uber have announced to include Bitcoin in their payment infrastructure, thus spiking the mass adoption of Bitcoin.
With this move, Goldman Sachs clients will have access to a nascent asset class (Bitcoin) that has intrigued billionaires worldwide. However, Goldman admitted that they are still in the nascent stage of the ecosystem’s development and seek approvals from the regulators like Securities and Exchange Commission (SEC) and the New York Department of Financial Services. It is still very unclear whether such a move will work out in favor of the bank or not.