Earlier this month, Goldman Sachs made a significant move into the cryptocurrency market by getting the service of Justin Schmidt to lead its digital asset division.
While the bank remains non-committal about the scope of its cryptocurrency operation, actions speak louder than words.
The Financial news website Tearsheet first reported the news of Schmidt’s hiring in an article on Monday, indicating that the former cryptocurrency trader had reported to work on Apr. 16.
The said article quoted Goldman Sachs spokewoman Tiffany Galvin, who issued the following statement:
“In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering.”
The Wall Street bank has quietly led the institutional push toward cryptocurrency, having already cleared bitcoin futures on behalf of clients. Goldman CEO Lloyd Blankfein announced last autumn that the bank was exploring the possibility of cryptocurrency trading services.
In December, Bloomberg reported that the bank had already decided to set up a trading desk to make markets in digital assets, with a tentative launch expected by June of this year. Blankfein later tempered those expectations by indicating that his bank would be merely clearing futures on bitcoin for the time being.
The addition of Schmidt to the company is great thing or push. Schmidt is a MIT computer science graduate, this is a strong sign that Goldman is moving forward with its plans to service the digital currency market.
This could entail helping clients gain exposure to the asset class using both conventional and non-conventional methods. A trading desk model would mean that cryptocurrency transactions are actually facilitated through the investment bank, which would give Goldman the distinction of market maker.
Some of bitcoin’s biggest advocates believe that institutional trading is necessary to increase mainstream adoption of cryptocurrency and promote stable markets.
Efforts are also underway to convince the U.S. Securities and Exchange Commission (SEC) to allow for the first bitcoin exchange-traded fund (ETF). Such a move would bring crypto into the fold of a $5 trillion (and growing) ETF market. However, this would require the SEC to adjust an important section of the 1934 Securities and Exchange Act. The regulator has launched formal proceedings on the matter after CBOE presented a new case for bitcoin futures.