Bitcoin, the cryptocurrency created by Satoshi Nakamoto, is going to witness increased legitimacy because of Goldman Sachs’s plans to open a bitcoin trading desk in near future.
Goldman Sachs Group Inc. is “bucking the risks and moving ahead with plans to set up what appears to be the first Bitcoin trading operation at a Wall Street bank”, wrote New York Times reporter, Nathaniel Popper. Other banks view Bitcoin as a “speculative bubble” because of the frauds related to it.
Rana Yared, one of Goldman’s executives managing the creation of “bitcoin trading desk” was quoted: “Goldman had concluded that Bitcoin is not a fraud and does not have the characteristics of a currency. But a number of clients wanted to hold it as a valuable commodity, similar to gold, given the limited quantity of Bitcoin that can ever be “mined” in a complex, virtual system. She added, “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.’”
Goldman is going to start off small by trading Bitcoin futures. The bank will use its own money for the commutation of Bitcoin futures contracts for its institutional clients. It will also start offering “non-deliverable forwards”, which is its own version of a future. Justin Schmidt, formerly a crypto trader at the hedge fund Seven Eight Capital, was hired a few weeks ago to run Goldman’s Bitcoin trading operation.
Goldman Sachs will have to receive regulatory approvals from Federal Reserve and New York authorities. It will also have to come up with a secure way to hold virtual currencies which meets Wall Street’s standards. Though it still has a long way to go, Goldman is currently blazing the trail by being Wall Street’s most innovative and sophisticated firm.
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