Due to rocky regulatory uncertainties, Goldman Sachs is ditching its previous plan of opening a desk to trade physical cryptocurrencies. Instead, the bank giant is focusing on a custody product for crypto, to service large institutional clients.
The Wall Street giant intends to acquire cryptocurrency and hold big amounts on behalf of big name clients.
There is still a long journey left and many steps need to be taken by entities beyond Goldman Sachs to authorize a regulated bank to trade cryptocurrencies.
The desk to trade physical cryptocurrencies was an idea expressed whilst Goldman Sachs was still exploring the crypto world and creating the best approach to serve customers.
The highly volatile worth of Bitcoin (BTC) ranged from more than USD 20,000 to a present value of USD 7,300. The bank experienced difficulty in tackling a regulatory block, which if cleared would have protected Goldman Sachs in the fluctuating crypto market.
Lael Brainard, a Federal governor cited extreme volatility, lack of governance and legal frameworks for protecting customers, and a vulnerability to money laundering as the chief concerns concerning crypto.
“This combination of a new asset, which is not a liability of any individual or institution, and a new record keeping and transfer technology, which is not maintained by any single individual or institution, illustrates the powerful capabilities of today’s technologies,” she said in a May 15 speech. “But there are also serious challenges.”
Competition is rife and plenty, when it comes to firms aiming to be the preferred choice clients choose for crypto custody services. Coinbase, the bitcoin exchange; and BitGo, the IT service management company, are a few crypto firms chasing custody.
Rana Yared, a Goldman executive supervising the creation of the trading operation reasoned, “I would not describe myself as a true believer who wakes up thinking Bitcoin will take over the world.” Ms. Yared added, “For almost every person involved, there has been personal skepticism brought to the table.”
For now the acquisition of the crypto product is the main aim for Goldman Sachs.