GOLDMAN Sachs, a key player in the financial world, is now biting its tongue and moving ahead with plans to set up what seems to be the first bitcoin trading desk at in Wall Street.
Many believe this is a call they’ve been waiting for as this could be the next step in legitimizing the use of virtual currency.
The desk won’t be buying and selling Bitcoin, but will be looking at heading that way if they can achieve regulatory permission and would also be attempting to understand the additional risks associated with trading crypto.
Rana Yared, one of the Goldman executives overseeing the creation of the trading operation, said the bank was cleareyed about what it was getting itself into.
Rana, said: “I would not describe myself as a true believer who wakes up thinking Bitcoin will take over the world,” Ms. Yared said. “For almost every person involved, there has been personal skepticism brought to the table.”
For a well known and respected bank on Wall Street, it’s a big event to even consider this new operation, and is a breath of fresh air for all the crypto enthusiasts out there trying to spread the word.
The thought of this idea would have been thought of as ridiculous only a few years ago, but times have changed and cryptocurrencys have created a stir in the traditional finance world.
The past few years have seen many hedge funds and banks expressing their interest in virtual currency and the underlying technology they use.
Jamie Dimon, the chief executive of JPMorgan Chase, famously called Bitcoin a fraud, and then retracting his statement and emphasizing his regret on Fox News stating he “regrets making them.”
Ms. Yared said 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.
“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,’” she said
Ms. Yared said: “the bank had received inquiries from hedge funds, as well as endowments and foundations that received virtual currency donations from newly minted Bitcoin millionaires and didn’t know how to handle them. The ultimate decision to begin trading Bitcoin contracts was approved by Goldman’s board of directors.”
“It is not a new risk that we don’t understand,” Ms. Yared said. “It is just a heightened risk that we need to be extra aware of here.”
“He will initially be placed on Goldman’s foreign currency desk because Bitcoin trading has the most similarity to movements in emerging market currencies, Ms. Yared said.