While many top market voices have shunned the elusive cryptocurrency Bitcoin, one of the world’s largest financial services conglomerate Goldman Sachs is all set to establish a Bitcoin trading operation at a Wall Street bank, according to a New York Times report. Rana Yared, one of the Goldman executives overseeing the creation of the trading operation, told the publication that a number of Goldman Sachs’ clients wanted to hold Bitcoin as a valuable commodity, similar to gold, given its limited quantity. “It resonates with us when a client says, ‘I want to hold Bitcoin or Bitcoin futures because I think it is an alternate store of value,’” she told the paper. We take a closer look, and bring you three key things to know.
Goldman Sachs’ take on Bitcoin
While the move may be seen as a step that is likely to lend legitimacy to virtual currencies, Goldman Sachs maintains that Bitcoin is not a currency. According to the firm, while its not a currency its not a fraud either. This may be in contrast to the views of top economists including nobel laureate Robert Shiller too had predicted that ‘Bitcoin’ will not be a permanent feature in the financial world. More recently, a report by Bank of America Corp has called likened Bitcoin’s fall to the biggest bubble in history.
Will trade Bitcoin contracts
Interestingly, the firm will trade Bitcoin futures, and not Bitcoins per se. It will trade Bitcoin futures in a principal, market-making capacity and will also create non-deliverable forward products, Bloomberg said. However, a team at the bank is looking at going in that direction if it manages to get regulatory approval, and also takes cognisance of additional risks associated with holding Bitcoins.
Use own money
Goldman Sachs will set up first bitcoin trading operation at a Wall Street bank, and use use its own money to trade in various Bitcoin linked contracts. Further, the firm also seeks to create its own version of a Bitcoin future contract, CNBC TV18 reported. According to the channel, Goldman Sachs expects to begin operations by June end. The firm has also hired cryptocurrency trader Justin Schmidt will look after the day-to-day operations. Interestingly, Goldman Sachs is aware of the skepticism surrounding dealing in Bitcoins. “I would not describe myself as a true believer who wakes up thinking Bitcoin will take over the world. For almost every person involved, there has been personal skepticism brought to the table,” Yared said.