One of the world’s largest investment banks may soon bring cryptocurrencies into its trillion-dollar investment fold.
Goldman Sachs is allegedly devising a cryptocurrency custody service, individuals familiar with the matter told Bloomberg. The offering would open Goldman Sachs custodial services to cryptocurrency funds, providing them an institutional avenue through which to manage their assets. This would outfit the funds with security, insurance and other investment measures that would otherwise be unattainable.
If not unattainable, such asset-securing guarantees are at the very least elusive in such an unregulated and fledgling market, but if realized, Goldman Sachs’ crypto custody could change this. Talk of the offering itself is an indicator that demand for these services is on the rise, and if the services materialize, they may even encourage skeptical or unenthused investors to get into the game.
“In response to client interest in various digital products we are exploring how best to serve them in this space,” a Goldman Sachs spokesperson commented on the matter. “At this point, we have not reached a conclusion on the scope of our digital asset offering.”
If the offering gets the go-ahead, it would give a buff to the cryptocurrency market’s credibility. Like a vote of confidence, the custody service — and the client protections it would bring — could legitimize cryptocurrency index and hedge funds in the eyes on institutional players. It may also free up the potential for other cryptocurrency-related investment services, such as prime-brokerage services, Bloomberg’s sources indicated.
The offering would be a welcomed addition to the market’s institutional investment instruments. Approved and launched last year, the industry’s only institutional-grade instruments are the Cboe and CME bitcoin futures contracts. For more than a year now, the space has struggled to win the SEC’s approval for a bitcoin ETF, a fight which, despite renewed efforts, is still in a deadlock.
Meanwhile, some institutional organizations have been increasing their involvement in the market without absorbing its assets into traditional investment offerings. The Intercontinental Exchange (ICE), for instance, recently unveiled its cryptocurrency payment ecosystem Bakkt, an announcement that came three months after ICE revealed that it is creating its own cryptocurrency trading platform. Northern Trust Financial also announced earlier this month that it would open administrative services to a select group of hedge funds invested in crypto, although these services do not include direct asset custody like Goldman Sachs’ own.
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