The crypto bears and bulls aren’t sure what to make of the state of Goldman Sachs’ planned cryptocurrency trading desk, or whether this is going to be a positive or negative boost for prices.
That’s because there’s been a fair amount of media-sponsored confusion this week, with reports two days ago saying that Goldman was halting its plans for the crypto desk, and then a backtrack when Goldman called this “fake news”.
On September 5, Business Insider cited unnamed sources as saying that Goldman’s crypto-trading desk—targeted for creation by the end of June this year—had been deprioritized due to an unclear regulatory environment.
Reuters ran its own version of the story, citing Business Insider, as well. But it also talked to Goldman Sachs spokesperson Michael DuVally, who reportedly told Reuters that “At this point, we have not reached a conclusion on the scope of our digital asset offering”.
Now, Goldman Sach’s is calling the reports false.
"I never thought I would hear myself use this term but I really have to describe that news as fake news," Goldman Sachs Chief Financial Officer Martin Chavez said on stage at the TechCrunch Disrupt Conference in San Francisco, as reported by CNBC.
But the truth is lost somewhere in the fog of interpretation, as is often the case.
Goldman made major waves in the crypto community in May when it became the only major bank in the West to officially confirm plans to develop, deploy and operate a cryptocurrency trading desk. It was significant because other majors—including Citibank, JPMorgan and Bank of America—are sitting on the sidelines on this one, waiting to see what happens in the regulatory arena.
It was also highly significant for the crypto community because Goldman’s bold foray would likely have a domino effect.
But then the other shoe dropped—sort of. Related: S&P's New "Custom Credit Ratings" For Chinese Debt
Goldman now says it’s not ditching its crypto-trading desk, and it’s working on a bitcoin derivative for clients called the “non-deliverable forward”. Demand, says Chavez, is high enough to make sure this happens.
The Goldman CFO also reminded everyone that there was never a strict timeline set for the crypto-trading desk, so reports that it’s been postponed are false.
“Our institutional clients said, ‘We would love for you to clear these new Bitcoin-linked futures contracts offered by the exchanges,’ so we’ve been doing that, and then clients since May [started to ask], ‘We would like for you also to provide us liquidity and trade the principal as principal the futures contracts, not just clear them’,” Chavez told his audience.
So that’s exactly what Goldman intends to do.
"The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they're settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges,” he said.
Some damage, though, had already been done, when the initial Business Insider report surfaced, suggesting the crypto-trading desk had been abandoned.
Crypto prices lost a lot when this report came out, on top of the two-thirds of its value bitcoin has already lost in the past nine months.
By Michael Kern for Safehaven.com
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