While most of the world hinges upon price news surrounding the the precipitous fall in value for Bitcoin and most of cryptocurrency, Wall Street megalith Goldman Sachs is updating clients on where they stand in relation to securing digital assets.
Despite the price fall experienced over the last two weeks, a growing number of clients for the big bank are posting inquiries into whether they can find safe harbor for their crypto assets. According to Bloomberg, Goldman has not made any progress on the front of direct custodian features for Bitcoin and altcoin holders, with the bank’s head of digital asset markets Justin Schmidt commenting upon the lack of availability at a conference in New York.
Schmidt, who offers a blunt response as to whether the bank is prepared to store customer digital assets, also highlights the present hurdle of understanding government regulations in relationship to cryptocurrency, a narrative that has been repeated as a consistent barrier to wider institutional access
“One of the things they ask me is ‘Can you hold our coins?’ and I say ‘No, we cannot”, One of the things we have to take into consideration when we’re building out our business is what we can and cannot do from a regulatory perspective.”
While Goldman may not directly offer a service for storing client coins, it has made efforts to enter the space–despite the murky legal landscape of cryptocurrency–by investing in custodial service provider BitGo Holdings Inc. in October. In addition, Goldman was one of the first to clear Bitcoin futures offered by Cboe Global Markets Inc. and CME Group Inc., showing some inclination by the company to wade into the space of cryptocurrency–even with prices in their present spiral.
While Goldman has yet to outright trade in the digital assets, there were rumors reported last year that the company was considering opening a trading desk, a point that stirred up contention this past September.
Schmidt went on to comment that clients appear to have raised some demand for the bank to offer direct custodial services, particularly with the level of complexity required for the average trader to maintain their private keys and establish their coins in a space safer than what most exchanges currently offer. Some of the conversation from the client end has been around the free-falling price of cryptocurrency, and the outlook that now appears shrouded as the asset reaches its lowest point on the year.
With some institutional players such as VanEck still in the running for the creation of a Bitcoin Exchange-Traded Fund, a renewal in the crypto markets could pose more demand upon Goldman to offer expanded services to clients. Schmidt cited Bakkt and last month’s announcement by Fidelity to enter the space of cryptocurrency as positive developments for the investment side of the industry. He also acknowledged that institutional investors fall on the conservative side, which accounts for the increased murmuring over the lack of custodial services,
“Custody is this foundational piece that is absolutely necessary. Custody is part of an overall integrated system where different parts need to work well with each other and safely with each other and you have to be able to trust all the different parts in that chain, from buying something to transferring it to storing it in for the long-term.”
Schmidt concluded with a statement of encouragement for crypto investors struggling with the recent market crash, claiming that the rapid shift in valuation would shake off some of the less desirable and rampant speculation present in the industry,
“In many ways, the rampant speculation that has been quelled over the past several months is really healthy for the ecosystem and I very much look forward to companies that are actually providing institutional-grade products and services.”
