The cryptocurrency market has not been at its best since this year.
Volatility has never been higher. A small rebound followed after months of declines from the cryptocurrency king Bitcoin.
But the price of the digital currency has zigzagged since then, unable to rise above certain symbolic thresholds. For example, Bitcoin is struggling to rise above $50,000 despite news of wider acceptance.
For example, a growing number of major key crypto investors have pleaded guilty. In turn, we’re seeing billionaires and big names in traditional finance like Ken Griffin, Radar Rio, Bill Gross, etc., recognizing that Bitcoin has found its place as an asset that we can invest in.
On the regulatory front, President Joe Biden signed an executive order urging federal agencies not to stifle innovation. A way to call for less heavy-handed regulation of the crypto space. In signs that the wind is blowing, cryptocurrency evangelists such as Sam Bankman-Fried, CEO of cryptocurrency exchange FTX.com, want to see a Biden administration issue regulation of the industry soon.
The first bitcoin-backed loan
Admittedly, the SEC still needs to be persuaded to approve the spot bitcoin exchange-traded fund EFT. Basically, the agency remains opposed to spot ETFs based on actual bitcoin holdings. But overall, the industry has never been in such an ideal position compared to the public, regulators and traditional finance.
So it’s no surprise that the prestigious investment bank Goldman Sachs has just taken a new step in the crypto-related services it offers. The institution just built its first bitcoin-backed lending facility.
Basically, Goldman Sachs through this deal allows borrowers to use bitcoin (BTC) as collateral to take out cash loans.
“We recently expanded a secured lending facility where we lend fiat backed by BTC; BTC is owned by the borrower,” a Goldman spokesperson told TheStreet in an emailed statement. “What’s interesting to us is that Structure and 24-7-365 day risk management.”
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Goldman Sachs did not provide further details, but traditional banks have thus added services previously only offered by crypto firms. Bloomberg was the first to report on the lending facility.
The deal shows how mainstream finance has generally embraced bitcoin and cryptocurrencies. Most Wall Street institutions are increasingly offering crypto-related services. This is the case with Jefferies Financial and Cowen Inc., which now has a division dedicated to digital assets.
Goldman Sachs expands its crypto services.
This is not the first time Goldman has dared to be associated with cryptocurrencies, especially Bitcoin.
March. The bank said it just conducted its first over-the-counter (OTC) crypto options trade. Goldman Sachs said the firm traded a bitcoin-pegged instrument called a non-deliverable bitcoin option (NDO), a derivative pegged to the bitcoin price paid in cash.
Crypto investors use options to hedge risk or improve yield, and over-the-counter deals are larger deals negotiated privately.
The Goldman deal was facilitated by Galaxy Digital, which invests in cryptocurrencies, especially bitcoin.
“This marks the first over-the-counter crypto transaction for a major U.S. bank as Goldman Sachs continues to expand its cryptocurrency offering, signaling the continued maturity and adoption of digital assets by banking institutions,” Galaxy said at the time.
Galaxy is a global provider of blockchain and cryptocurrency financial services to institutions, founded and run by Bitcoin evangelist and billionaire Mike Novogratz. Novogratz is also a former Goldman Sachs banker.
The deals show that Goldman believes cryptocurrencies are stable enough to be backed by large financial institutions.