After it began signing up clients for its upcoming crypto trading desk Goldman Sachs, one of the world’s largest investment firms, has been busy informing its clients on investment opportunities in digital assets. However, the banking giant is still unable to hold crypto assets on clients’ behalf.
Justin Schmidt, Goldman Sachs’ head of digital assets, said:
One of the things they ask me is ‘Can you hold our coins?’ and I say ‘No, we cannot,” One of the things we have to take into consideration when we’re building out our business is what we can and cannot do from a regulatory perspective.
Indeed, there appears to be a greater interest in this space from investors — Bitcoin search volumes now match those of April 2018 — but Goldman Sachs is severely limited by regulation. Cryptocurrency regulation in America remains very much in the works.
Schmidt also remarked on custodial issues, which is a problem for firms holding such a volatile asset on behalf of its client.
The question then becomes a matter of addressing client interest in what has been the best performing asset of the decade with the desire for stability:
Custody is this foundational piece that is absolutely necessary. Custody is part of an overall integrated system where different parts need to work well with each other and safely with each other and you have to be able to trust all the different parts in that chain, from buying something to transferring it to storing it in for the long-term.
Goldman has circumvented the problem by going through custodial service provider BitGo Holdings, instead of directly providing custodial services itself. Client requests for direct services appear to be increasing, but for the moment, the firm is limited in its capacity to answer.
Increased interest may be a result of the market being at its lowest valued point since September 2017, an opportune moment for savvy investors who want in on the game.
Agreeing with the likes of Anthony Pompliano insofar as the recent dip weeds out “tourist” investors, Schmidt believes that lowered valuations bring with them more serious investing possibilities:
In many ways, the rampant speculation that has been quelled over the past several months is really healthy for the ecosystem and I very much look forward to companies that are actually providing institutional-grade products and services.
Goldman Sachs Eyes the Crypto Market
However, despite the challenges, Goldman Sachs has always been very keen on digital assets.
The firm has been clearing Bitcoin Futures since June, CEO David Solomon confirmed in an interview on Bloomberg TV in China last June, stating that the firm must adapt to the changing environment:
We are clearing some futures around Bitcoin, talking about doing some other activities there, but it’s going very cautiously. We’re listening to our clients and trying to help our clients as they’re exploring those things too. Goldman Sachs must evolve its business and adapt to the environment.