According to the news report by Bloomberg, Goldman Sachs Group Inc. is planning to offer custody services for cryptocurrency funds. This means that the bank will hold cryptocurrencies on behalf of funds, thereby reducing the risk the customers face in terms of losing their investments to malicious attackers.
The fact that the Wall Street major was planning such a move was revealed to Bloomberg by internal sources that wished not to be named since these deliberations was still ongoing and private. According to these sources, no timelines have yet been set for when the bank will roll out these new offerings.
Considering the current slump in the cryptocurrency market, a formal offering from a financial institution such as Goldman Sachs would give cryptocurrency funds a credible backer, which in turn would lead the way for more investors betting on this asset class.
Additionally, putting a custody service operation in place could also open up the market for new ventures such as prime-brokerage cryptocurrency services.
Officially, a Goldman Sachs spokesperson stated that the company is responding to customers’ interest in digital assets by exploring how best they can serve them in such a space.
The global banking giant has already taken a few, if small steps into the cryptocurrency industry. Earlier this year, Goldman Sachs hired Justin Schmidt to lead its newly created digital assets division. The bank was also one of the first to clear Cboe Global Markets Inc.’s and CME Group Inc.’s Bitcoin futures contracts.
Then, in May this year the bank launched its own Bitcoin futures trading. However, the bank has not yet set up its own fully-fledged cryptocurrency trading desk for its clients. Overall, the bank has been rather hesitant about taking more aggressive steps into the crypto space at this time.
This contradictory stance of Goldman Sachs’ is reflective of the mainstream financial industry. For example, Larry Fink, Chief Executive Officer of the world’s biggest asset manager, Blackrock, claimed last month that he did not get the sense that there was much interest from their clients in cryptocurrencies. However, sources revealed simultaneously that the company was exploring options in Bitcoin futures.
Again, JP Morgan Chase’s Chief Executive Officer, Jamie Dimon has been vociferous in his condemnation of the cryptocurrency industry, but contradictorily also talks of Blockchain as the future of technology. Ironically, JP Morgan is also on the Wall Street majors that is leading the way for crypto offerings in the industry.
There are those who are positive in their approach to cryptocurrencies, such as Nomura Holdings Inc. and Intercontinental Exchange (ICE). Nomura recently entered into a partnership with a group of other companies and has created the consortium for custody services called Komainu.
ICE, the parent company of more than 20 exchanges across the globe, including the world’s largest, the New York Stock Exchange (NYSE), announced on Friday last week that is was creating a new ecosystem for digital assets which fully compliant with all regulations. This new exchange is due to be launched later this year in November. This venture is in partnership with industry majors such as Microsoft and Starbucks.
Sources have also stated that 3 Wall Street custodian giants, Northern Trust Corp., Bank of New York Mellon Corp. and JP Morgan Chase & Co. are also working on developing crypto related services.
But it is not only the Wall Street majors who have been considering custodial services for the clients. Cryptocurrency exchange major Coinbase launched its own custodial services last month, targeted at institutions that were willing to deposit at least $10 million in digital assets.