After news came out that Goldman Sachs was canceling plans to open a trading desk for cryptocurrencies, Goldman Sachs Chief Financial Officer Martin Chavez said on stage at the TechCrunch Disrupt Conference in San Francisco, that he never thought he would hear himself use this term – but he really had to describe the report as “fake news”.
The CFO said that the bank is working on a Bitcoin derivative as a “non-deliverable forward”, which are over the counter derivatives settled in US dollars where the reference price is the Bitcoin – US dollar price established by a set of exchanges.
After Business Insider reported that Goldman is dropping plans for a cryptocurrency trading desk, the price of Bitcoin and other top cryptocurrencies tumbled. For the past year, the Wall Street giant has been planning to launch some sort of cryptocurrency option for clients but it has never been clear when or what was going to happen.
In October a Goldman Sachs spokeswoman told CNBC that they are exploring how to best serve their clients’ interests in digital currencies. Also, the bank’s outgoing CEO, Lloyd Blankfein, tweeted in October that the bank was still thinking about Bitcoin.
“Physical bitcoin is something tremendously interesting, and tremendously challenging,” said Bankfein, who also mentioned that there needs to be a safe custody solution before the bank can move forward. “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 main barriers to entry for institutional investors are Bitcoin’s volatility, security and a place to store the actual assets. The possibility of Goldman entering the market, though, has boosted prices in the past year.
Bitcoin has struggled to recover its high near $20,000, hit in December – it is currently trading near $6,400. The value of the entire cryptocurrency market has dropped by more than 65 percent this year, according to data from CoinMarketCap.com.
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