Even Goldman Sachs, a giant Wall Street that trades the most esoteric assets of the market, cannot find a way to trade bitcoin.
The bank has ditched plans to open a table for cryptocurrency trading in the future, according to people familiar with the matter, because the regulatory framework for crypto is still unclear.
As part of the decision, Goldman has moved plans to open a table for cryptocurrency trading to further list priorities for how it can participate in the cryptocurrency market, people say. This can revive this plan later, they added.
But for now, Goldman focuses on other projects such as custody products for crypto, which means that banks store cryptocurrency and, potentially, track price changes on behalf of large fund clients. Many market observers say that for large institutional companies to get convenient bitcoin trading, there needs to be a good custody offering to maintain ownership.
After months of hope that Goldman would begin trading bitcoin earlier this summer, investment banks openly preached patience when studying emerging industries. However, in recent weeks, executives have concluded that many steps still have to be taken, most of them beyond their control, before a regulated bank will be allowed to trade crypto currencies, one of the people said.
“In response to client interest in a variety of digital products, we explore the best ways to serve them in space,” said a company spokesman. “At this point, we have not reached conclusions about the scope of our digital asset offerings.”
The company has created a market for clients on bitcoin futures as well as contracts for differences, allowing investors to bet on bitcoin prices without having the underlying assets.
Goldman openly tried to downplay his ambition to create a table that trades crypto currencies, offering statements that the company is still exploring the industry and trying to assess the best way to serve customers. Over the past year, the price of bitcoin has fluctuated widely, and is now trading at $ 7,300 coins, down from a high of more than $ 20,000.
Goldman’s interest first appeared in October, when reports suggested the company began studying industry with a group of employees in the currency trading division and its main strategic investment team.
In December, Bloomberg reported that banks hoped to have a table and run no more than June. It must be placed in the securities division, where companies trade everything from stocks to bonds to currencies. And in April, the bank hired Justin Schmidt as head of the bank’s digital asset market.
In May, The New York Times reported that a team at the bank was exploring a trading table if it could get regulatory approval and come up with a suitable way to face the additional risk of holding a cryptocurrency. At the time, the newspaper said Schmidt was considering cash bitcoin trading if the bank could get regulatory approval from the Federal Reserve and New York state banking authorities.
News coverage gives confidence among industry players that the bank will immediately open its own trading table.
However, it experienced regulatory restraints, one of the people said. The bank is looking for some unrealized regulatory changes and will protect banks like Goldman from some unique risks for cryptocurrency trading, the person said.
Lael Brainard, a Fed Governor who has spoken openly about opportunities and challenges for virtual currencies, has cited extreme volatility, lack of governance and a legal framework to protect consumers, and vulnerability to money laundering as a major concern.
“This is a combination of new assets, which are not the responsibility of individuals or institutions, and new record and transfer storage technologies, which are not managed by individuals or single institutions, illustrate the strong capabilities of today’s technology,” he said. in a speech on May 15. “But there are also serious challenges.”
When Goldman turns around, he will compete with other companies who want to be the preferred provider for clients looking for detention services. Bitcoin exchange Coinbase and BitGo are the first two crypto companies to target custody. Elsewhere, Fidelity, Nomura and JPMorgan are exploring similar offers.