Wall Street giant Goldman Sachs has announced it has plans to use its own money to trade in Bitcoin futures, after a decision by the investment bank’s board of directors, according to the New York Times.
This is a major turn in direction, given the bank’s often scathing remarks about the validity of cryptocurrency. It decided on the turnaround after requests from its customers who wanted to trade in Bitcoin.
Goldman Sachs will begin using its own money to trade Bitcoin futures contracts on behalf of clients in the next few weeks, although an exact date has not been set. It will trade using its own creation, known as a non-deliverable forward.
Justin Schmidt, its newly-appointed digital asset trader, wants to trade ‘physical’ Bitcoin, but the bank will need to gain approval from the Federal Reserve before it can implement its trading desk. The New York Times reports that one issue which will need resolving is to find a way to address the risk of hacking, a problem that has befallen other Bitcoin exchanges.
According to Schmidt, the current standards for Wall Street digital currency trading as yet have not been met. Also, it does not appear that the bank is embracing the new project with huge enthusiasm, perhaps a result of Wall Street’s past skepticism. Jamie Dimon, the chief executive of JPMorgan Chase once called Bitcoin a “fraud” and many banks have referred to a Bitcoin speculative “bubble”.
However, Goldman Sachs executive Rana Yared concluding that Bitcoin was not a fraud, saying she was clear about what the bank was doing:
“I would not describe myself as a true believer who wakes up thinking Bitcoin will take over the world,” Yared said. “For almost every person involved, there has been personal skepticism brought to the table.”
Goldman Sachs has said that it has no plans to initially buy and sell Bitcoin itself but a team is looking into the possibility providing it can gain regulatory approval and then work out a plan for eliminating risk. There is a general sense that the move by the bank may lend more legitimacy to cryptocurrency as a tradeable asset.
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