Goldman Sachs Reportedly Considering Crypto Custody Service

Goldman Sachs Group Inc. is reportedly set to become the first financial institution in the world to offer crypto custody services, in what could potentially be massive news for crypto investors. According to the report, the bank is seeking to hold crypto funds on behalf of clients who are investing in crypto, offering them enhanced holdings security and potentially sparking an entry rush into the market by investors seeking to take advantage of the reduced risk profile.

Massive Crypto Market Boost

According to the report which cites anonymous sources, no firm timeline has been fixed for the proposed service, with the decision still being deliberated at boardroom level. In the event that the decision does come to pass, however, it is expected to be very well received by markets and investors who will see it as another sign that cryptocurrencies are attaining institutional recognition and adoption.

The custody offering from a globally recognized institution like Goldman Sachs will not only provide a secure framework for storing crypto funds but will also give a much-needed shot in the arm for the legitimacy of the entire crypto asset class. Historically, banks like Goldman Sachs have viewed cryptocurrencies as reputational risk, so this would signal to the market that cryptos have ‘come of age.’

In addition to this, it is also expected to have a knock-on effect on crypto investment, making crypto investment significantly less risky for both retail and institutional investors. It could also potentially open the way for other value-added services such as prime-brokerage services in future.

“No Conclusion Yet”

Goldman Sachs is yet to comment definitively on the story, instead of releasing a statement saying that no concrete decision has been reached on the scale and scope of its planned crypto services.

The statement reads in part:

“In response to client interest in various digital products we are exploring how best to serve them in this space. At this point, we have not reached a conclusion on the scope of our digital asset offering.”

The bank is not the first major financial institution to make a play in the crypto custody space. May 2018 saw the launch of Komainu; a custody consortium made up of a partnership between Nomura Holdings Inc. and other firms. It has also been reported that not less than three Wall Street banks, namely JPMorgan Chase & Co., Northern Trust Corp. and Bank of New York Mellon Corp. are currently considering or actively working on crypto custody offerings.

Unlike JPMorgan. Goldman Sachs has been relatively cagey about its crypto market strategy, electing not to set up a dedicated crypto trading desk despite bringing on Justin Schmidt earlier in 2018 as Head of Digital Assets. Despite this, its actions have been no less decisive, such as when it became one of the first Wall Street institutions to clear bitcoin futures offered by the Chicago Board Options Exchange (CBOE).

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3 Responses

  1. Probably, at some point, this will happen but Goldman Sachs needs to figure out how they can reduce the risk inherent to this market. It will take some brainstorming but I think they will find ways to make this work and their entry will surely help the whole crypto industry.

  2. They need to think this through because it does have a big risk involved. What will they do when people come running to them as their Bitcoin investment is going down? Right now, the crypto market is very volatile and it will be interesting to see what they can offer.

    1. Right now this is in discussion and it will probably be some time before Goldman Sachs enters this market. Like you said, they need to figure things out. This is a very unstable market and potential clients may expect some assurances that they won’t lose their funds.

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