Goldman Cryptocurrency Chief Concerns About Fraud, But Not About Cryptocurrency Future


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Goldman Sachs’ global head of digital assets said in a question and answer published in the company’s Global Macro Research newsletter on May 21 that the growing space for cryptocurrency, particularly related to “storage at hot “, was” just a big fraud far from a very negative impact on the market. “

Responding to a question about the risks to the industry, Mathew McDermott, who was expressing his own point of view and not that of the research team, also noted that “inconsistent regulatory actions” around the world could “hinder development. later of the cryptographic space ”.

But McDermott, a nearly 16-year Goldman Sachs veteran who previously served as the company’s global head of cross-asset funding, felt reassured that the big crypto firms were managing their “growth without a noticeable increase.” fraudulent activity ”and encouraged by the industry. . “It’s not often that we see the emergence of a new asset class,” he said.

Related: Greenpeace stops accepting Bitcoin donations, cites high energy consumption

Similar to most other large financial services firms, Goldman Sachs was initially skeptical of cryptocurrency, but overcame doubts as demand for crypto-related investment products and services steadily increased among investors. . Earlier this month, the investment banking giant announced in an internal memo that it has traded two types of bitcoin-related derivatives and that it aims to participate more heavily in the market by “selectively integrating” them. crypto trading service providers. It also recently launched a platform that provides crypto news and prices.

McDermott said the company’s latest initiatives stem from growing demand from institutional investors and wealth managers. “Some of the wealth management clients – high net worth individuals and family offices are already very active in the business and, in a sense, are paving the way for other investors,” McDermott said. “They remain interested in bitcoin, but are also increasingly focusing on the broader value that cryptocurrencies can bring. They examine the ether in the context of the entire Decentralized Finance (DeFi) ecosystem and how it can really transform financial markets.

In a March survey of 280 clients, Goldman Sachs’ digital assets team found that two in five respondents were exposed to cryptocurrency, while about three in five expected to increase their holdings at over the next year. The group also found that the daily Chicago Mercantile Exchange Bitcoin futures activity in April was up 900% from the same period a year ago.

But McDermott said the company “is just beginning to offer … customers access to the crypto space due to an uncertain ‘regulatory landscape’. He said the company “was looking to offer lending structures in and around the crypto space to corporate clients as well as structured notes” and that it “would provide access to cryptocurrencies, particularly bitcoin, via note-type funds or structured products ”for its wealth management clients.

Related: Crypto Derivatives Exchange BitMEX Commits To Go Carbon Neutral

McDermott noted that institutions have become more comfortable with custody risks that had previously frightened them. “… Custody offerings are much safer and enforcement and risk management have improved dramatically,” he said.

Regarding the environmental concerns that have recently played a role in the cryptocurrency’s price drop, McDermott said that “a number of potential investors have expressed concerns” and “are considering improving sustainability options.” He added, “Investors are intrigued to hear about miners tapping into renewable energy sources to mine crypto assets. And carbon neutral funds are emerging, which, for example, calculate the carbon cost of crypto-mining and buy credits to offset their environmental impact. “

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