Goldman Sachs takes another step
In an interview with Bloomberg, a spokesperson for Goldman Sachs said that for the first time in the history of the banking giant, it had loaned money collateralized by BTC held by borrowers. She then noted that the deal was attractive for its structure and round-the-clock risk management.
A Bitcoin holder can use this type of loan to borrow fiat currency, such as US dollars, by pledging their Bitcoin as collateral to the bank. However, if the price falls too low, the inherent volatility of Bitcoin can make these loans risky, and the borrower may be forced to increase their collateral, or they may be liquidated.
The bakery giant’s major move signals its entry into a new line of business that many crypto-focused firms are currently eyeing. Last month, Goldman Sachs completed its first over-the-counter (OTC) cryptocurrency transaction by partnering with the business unit of crypto investment firm Galaxy Digital. The upcoming merger event, which will see the Ethereum blockchain transition from proof-of-work to proof-of-stake, has also increased customer demand.
Growing interest from Wall Street banks
Goldman Sachs isn’t the only banking giant seeking a strong presence in the crypto industry. Recently, multi-trillion dollar asset management giant BlackRock made headlines after announcing the launch of a blockchain-focused ETF. Prior to this, the company also announced its partnership with USDC stablecoin operator Circle. American multinational independent investment bank Jefferies Financial Group Inc. is also extending its services to crypto clients.
Wealth management, trading, and investment banking are just a few of the crypto-related products and services currently available on Wall Street. According to Damien Vanderwilt, co-president of Galaxy Digital Holdings, lending to companies that provide virtual currency as collateral is the next step.