Goldman Sachs Explores Custody Offering for Crypto Funds
Earlier this year, Goldman Sachs confirmed plans to launch a Bitcoin futures trading desk to meet rising client demand. On Aug. 6, the leading investment bank announced that it is considering offering custodial services for cryptocurrency funds.
Goldman Sachs Embraces New Asset Class
Goldman Sachs is exploring a custody offering for cryptocurrency funds, reports Bloomberg.
The custodial service means Goldman Sachs would hold cryptocurrencies on behalf of funds, providing a safeguard for client capital from hacking and cybertheft. If enacted, Goldman Sachs would become the first major investment bank to back cryptocurrency funds–potentially drawing an influx of institutional capital to the sector.
The launch date of the custody offering has not yet been disclosed. According to Bloomberg, the launch of a custody operation could lead to further institutional solutions for cryptocurrency investment, such as prime-brokerage services.
In an interview with Bloomberg, a spokesperson for Goldman Sachs said:
“In response to client interest in various digital products we are exploring how best to serve them in this space. At this point we have not reached a conclusion on the scope of our digital asset offering.”
Wall Street to Crypto: Institutional Solutions on the Rise
In early May, Goldman Sachs confirmed plans to launch a Bitcoin futures trading desk to meet rising client demand. One month later, the firm revealed plans to expand its cryptocurrency division beyond Bitcoin futures.
On June 20, Goldman Sachs COO David Solomon told Bloomberg:
“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.”
Morgan Stanley also began clearing Bitcoin futures contracts at the start of 2018.
On July 2, San Francisco-based startup Coinbase launched its own custodial service for institutional investors, called Coinbase Custody. Shortly after, Coinbase secured a $20 billion hedge fund through its prime broker to give institutional investors access to a greater variety of financial services, such as margin financing.
On June 26, Cboe futures exchange submitted a Bitcoin ETF application to the U.S. Securities and Exchange Commission (SEC). The application will be under review until this September.
In the onset of regulated digital asset derivatives and security token markets, it’s evident that a growing number of major investment firms are preparing institutional solutions for the developing digital economy.
Cover Photo by Hunters Race on Unsplash
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