U.S. bank, Goldman Sachs, has announced its first bitcoin-backed lending facility and the move is an important step for the investment bank as Wall Street continues to embrace digital assets. According to a spokesperson for the bank, the secured line of credit lends cash against bitcoin collateral held by the borrower.
The deal was of interest to Goldman Sachs because of its structure and 24-hour risk management. It also allows cryptocurrency owners to receive fiat money, such as the dollar, using their cryptocurrencies as collateral, a first for the Wall Street bank.
The move is another sign that big banks are moving closer to cryptocurrencies and expanding their services to incorporate clients with investments in digital assets. Goldman Sachs already has a crypto asset team and traded its first bitcoin spot options on the over-the-counter (OTC) market in March, becoming the first major U.S. bank to do so.
Earlier this month, Goldman Sachs announced that it planned to add ethereum OTC options to that offering. The bank’s analysts have cited Ethereum’s upcoming meltdown and move to Proof of Stakes as factors favoring demand for the asset.
According to Goldman Sachs’ global head of digital assets at Goldman Sachs’ private wealth management division, Mary Rich, the bank wants to follow Morgan Stanley in offering crypto investments for its private equity clients.
The bank went from having a digital asset trading platform to stopping it years later. In a particular case in May 2020, the bank said that bitcoin is not an asset class. However, a few months later, Goldman Sachs began to change its tune by hiring a cryptocurrency research team, publishing several bullish reports, predicting a US$100k price for BTC, participating in funding rounds and soliciting a bitcoin ETF.
