Goldman Sachs Becomes the First U.S. Bank to Offer A Bitcoin-backed Loan In Crypto Push
Wall Street banking giant Goldman Sachs is making a fresh move to expand its presence in the crypto space. On Thursday, April 28, Goldman announced that it has started offering Bitcoin-backed loans steering ahead institutional crypto adoption.
Speaking to Bloomberg, a Goldman spokeswoman said that the banking giant offered a cash loan against Bitcoin as collateral, owned by the borrower. She further added that the deal was particularly interesting because of its structure and 24-hour risk management.
Bitcoin-backed loan offerings have been growing up in the market. This is specifically useful for long-term holders who can borrow money against their Bitcoin holdings while simultaneously letting the asset value appreciate. However, Bitcoin is an highly volatile asset class. Thus, if the BTC price drops significantly, the lender might ask the borrower to increase the collateral or face the risk of getting their assets liquidated.
But such kind of lending instruments are getting lot of prominence among financial giants on Wall Street amid the surge and popularity of the crypto assets. Last month in March 2022, Goldman Sachs traded its first over-the-counter (OTC) Bitcoin options becoming the first major U.S. bank to do so.
Earlier this month, the banking giant further added that it is likely to start offering over-the-counter (OTC) Ether options ahead of the Ethereum 2.0 launch ahead this year. Goldman said that there’s a growing demand for Ether derivative products from its clients as they view ETH as “more of an investable asset class”.
In its report, Bloomberg also names some of the other Wall Street banking institutions expanding services to crypto clients. It adds: “Wall Street banks are ramping up their crypto offerings after a surge in price and popularity chipped away years of prior resistance. Some of the crypto-related products and services already offered by Wall Street include wealth management, trading and investment banking”.
Earlier this month, Goldman Sachs confirmed that it will start offering crypto investments services to its clients on a broader scale by Q2 2022. Goldman’s global head of digital assets for its private wealth management division - Mary Rich said: ″We are working closely with teams across the firm to explore ways to offer thoughtful and appropriate access to the ecosystem for private wealth clients, and that is something we expect to offer in the near term”.
However, before making any move, Goldman shall be awaiting a regulatory nod.