It is now almost three months since $73 billion investment US-based banking powerhouse, Goldman Sachs said it wasn’t ready to facilitate the physical delivery of Bitcoin (BTC) for its clients. The banking giant hasn’t still acquired the ability to hold digital assets for its clients, despite the growing demand from a number of clients.
The head of digital asset markets at the banking giant, Justin Schmidt, said this at a New York conference. When asked if his finance house could hold cryptocurrencies on behalf of its customers he said No. Going on to cite regulatory issues as a constraint to fulfilling such an obligation.
When Should We Expect Goldman Sachs to Enter the Bitcoin (BTC) Market?
We can recall that Goldman Sachs has since been facilitating Bitcoin futures investments for its customers for some time now. The CEO of the banking giant David Solomon, in an interview in China with Bloomberg TV directly confirmed that his company had cleared Bitcoin futures contracts since June this year. According to the banking magnet, Goldman Sachs has to evolve and adapt to its surroundings before any new endeavors can be attainable.
The US-based $73 billion investment bank has entered the digital asset market and has since been assisting investors who trade in Bitcoin in the BTC futures market. However, the Bitcoin futures markets currently existing in the United States market don’t promise customers the physical delivery of BTC. This, in essence, means that investors aren’t technically buying BTC from the futures markets. Rather they are dealing in contracts that reflect Bitcoin’s price in the market.
Bakkt, the digital asset exchange developed by the parent company of the NY Stock Exchange, ICE, is set to launch a futures market next year. This launch will be in January the network wants a setting were it delivers physical Bitcoin (BTC) to investors. As of now, however, no there is no regulated US futures market that holds virtual currencies for its clients. For Goldman Sachs to keep cryptocurrencies on behalf of its clients, it will need regulatory approval to complete this process as a trusted and regulated crypto custodian. Companies like BitGo and Coinbase have implemented unique ways to get regulatory approval as a digital asset custodian.
BitGo, Launched BitGo Trust, a Self-Regulated Custodian
Schmidt said crypto custody is an essential component which his company lacks. But without regulatory approval, the bank won’t be able to hold digital assets directly for the bank’s clients. He said
“Custody is the foundational piece. It is absolutely necessary. It is part of the integrated system where multiple parts need to function well together and safely, and you have to trust the different aspects of the chain, from buying to transferring it then storing it for the long-term.”
Clients are Beginning to Ask
According to Schmidt, Goldman Sachs clients have started to ask about when the bank will provide custodian solutions for its clients to protect their digital asset investments. Over time, as the cryptocurrency space finds more regulatory understanding, the bank could set an appropriate date to launch operations as a custodian. As of now, Goldman Sachs isn’t ready to do that.
Princess Ogono is a writer, lawyer and fitness enthusiast. She believes cryptocurrencies are the future. When she's not writing, she spends time with her adorable cat, Ginger and works out often.
