Goldman Sachs Working On Bitcoin Derivative For Clients, Says CFO
Amongst the few supporters of cryptocurrency in the institutional financial sector, Goldman Sachs was rumored to have dropped their plans for a cryptocurrency trading desk. Setting the record straight the Chief Financial Officer of Goldman Sachs, Martin Chavez called it ‘fake news.’
The CFO cleared the air as he took to stage at the TechCrunch Disrupt Conference in San Francisco. He said:
“I never thought I would hear myself use this term but I really have to describe that news as fake news.”
He also added that the bank is working on a type of derivative for bitcoin as their “clients want it.” Chavez noted:
“The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they’re settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges.”
After the initial report of Goldman Sachs dropping their plan made rounds, the price of bitcoin and other top cryptocurrencies dropped. The Wall Street giant has reportedly considering to have some sort of cryptocurrency option for the past year. The details around the same weren’t quite clear, which might have contributed to the rumor.
In the bank’s defense, Chavez not just ridiculed the week’s report about the bank dialing back plans but also stated that they did not mention any timeline for their plans. Chavez said:
“When we talked about exploring digital assets that it was going to be exploration that would be evolving over time. Maybe someone who was thinking about our activities here got very excited that we would be making markets as principal and physical bitcoin, and as they got into it they realized part of the evolution but its not here yet.”
Since May, Goldman Sachs has been clearing bitcoin-linked futures contracts offered by the CBOE and CME and is providing clients liquidity for those futures. While in terms of physical bitcoin, the bank isn’t too sure as a safe custody solution is necessary before they can move forward. The CFO said:
“Physical bitcoin is something tremendously interesting, and tremendously challenging. From the perspective of custody, we don’t yet see an institutional-grade custodial solution for bitcoin, we’re interested in having that exist and it’s a long road.”
The issue with bitcoin’s volatility, security, and where to store the actual assets are the key elements that are stopping the institutional investors from marching into the crypto-scene. Just the possibility of establishments like Goldman entering the market have kept the sentiment, and prices boosted in the past year.
Trading near $6,400 on Thursday, bitcoin is struggling to regain its December high near $20,000. According to the data from CoinMarketCap.com, the value of the entire cryptocurrency market has dropped by more than 65 percent this year
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