Goldman Sachs Group taking a closer look at Bitcoin
03 Oct 2017
Goldman Sachs Group Inc is looking into a trading desk for cryptocurrencies and what logistical and legal hurdles making markets in them might entail.
"In response to client interest in digital currencies, we are exploring how best to serve them in the space," the bank said in a statement yesterday, but did not provide further details.
According to a person familiar with the matter, the review is in its earlier stages might not necessarily lead anywhere, The Street reported online. He added that the bank did not agree with JPMorgan Chase & Co, CEO Jamie Dimon's assessment that Bitcoin is highly speculative, and trading in a currency originally valued for its anonymity would face significant regulatory hurdles in the US.
According to commentators, the US' Bank Secrecy Act, aimed at preventing money laundering and terrorist financing, required US firms to maintain a paper trail strong enough to reconstruct transactions of $10,000 or more if law enforcement deemed it necessary.
Also, according to a Goldman portfolio manger's report, the Internal Revenue Service has refused to give virtual currency the status of legal tender in any jurisdiction, and the agency considered it property for tax purposes.
Meanwhile, Bitcoin briefly multiplied five times in price this year from less than $1000 to over $5000, and although the digital currency plunged by about $2,000 after a Chinese crackdown in September, the digital currency rose to its highest in nearly a month yesterday at around $4,410, according to CoinDesk.
"The smartest Wall Street firms have an opportunity to lead the market in offering financial services to the burgeoning cryptocurrency industry," Matthew Goetz, managing partner and CEO at cryptocurrency investment firm BlockTower Capital and a former vice president at Goldman Sachs, www.cnbc.com reported.
"I think it behooves the smart and more forward-thinking firms to be involved in cryptocurrency," he said, "given the number of new services and business lines that will stem from it as this important new industry continues to build and institutionalize."