Goldman Sachs offers cash loans collateralized with Bitcoin
Goldman Sachs is the first major US bank to offer Bitcoin-collateralized cash loans. The financial service provider has already introduced several crypto services in 2022, thereby demonstrating its confidence in the new industry.
On April 28, Goldman Sachs announced the launch of its first Bitcoin-collateralized lending offering. This is a significant move by a major US bank that should accelerate further cryptocurrency adoption.
Bitcoin owners can now receive cash loans from Goldman Sachs by pledging their bitcoins as collateral. A Goldman spokeswoman told Bloomberg that the deal is interesting because of its structure and 24-hour risk management.
This move will further bridge the gap between traditional finance and the crypto sector. It will also have a pull effect on other banks to also deal with crypto offers.
In 2022, Goldman Sachs made a big step into the crypto industry. In March, the major bank traded its first over-the-counter Bitcoin options in partnership with Galaxy Digital. This was like direct competition to the players already established in the OTC crypto market.
Now Goldman Sachs is poised to expand these services to other digital assets. According to a report from early April, the plan is to offer crypto OTC options for Ether (ETH) ahead of the planned launch of Ethereum 2.0. The bank posits that its clients view ether as “an investable asset class.” Bloomberg notes:
“Wall Street banks are expanding their crypto offerings after price surge and popularity swept away years of resistance. Jefferies Financial Group Inc. is expanding its banking services for crypto customers, while BlackRock Inc. participated in a $400 million funding round for stablecoin company Circle this month. Boutique investment bank Cowen Inc. launched a digital assets division in March.”
Wall Street and the crypto industry
Financial players on Wall Street have been waiting for more regulatory clarity before deciding to enter the crypto space. Congress and the White House itself have now taken important steps in this regard.
Some of the crypto-related products already available in the market include investment banking, wealth management, and trading. Following recent developments, Goldman Sachs is also poised to partner with crypto exchange FTX.
As part of this partnership, Goldman will provide FTX with regulatory support. The focus is on dealing with the Commodity Futures Trading Commission (CFTC) in a legally compliant manner. Last month, FTX filed an application with the CFTC to offer leveraged crypto derivatives to its retail clients.
Another report from Bloomberg notes that bitcoin-backed home loans have proliferated recently as the asset class matures. “New home loans are deepening the role of volatile digital assets in the real estate market,” it said.