Goldman Sachs Bitcoin Backed Loan
Yesterday, Yuegi Yang, a Bloomberg Reporter, tweeted that Goldman Sach will start offering Bitcoin-backed loans. Goldman Sachs is a global investment banking network offering security and investment management while providing a vast collection of financial tools to investors.
Goldman Sachs is introducing its first lending facility with bitcoin backing. The Tweet by Yuegi Yang says,
“Goldman Sachs offered its first-ever lending facility backed by Bitcoin, a significant step in Wall Street’s embrace of cryptocurrencies. The deal was interesting to Goldman because of its structure and 24-hour risk management.”
This facility allows investors to receive fiat loans like USD by staking their crypto as collateral. There are no further details about this upcoming bitcoin-backed loan facility.
Financial Institutions Warming up to Crypto
This move by Goldman Sachs proves that many top fiat banks are already warming up to crypto. Goldman Sachs was never positive about crypto up until just a year ago. Initially, Goldman Sachs had a crypto trading platform but closed it and even wildly criticized bitcoin. In 2020, for instance, Goldman Sachs said bitcoin is not an asset class.
However, recently the financial institution has been very bullish on crypto, anticipating a $100k price tag for the coin. Goldman Sachs has published several bitcoin articles, mostly around the price. It also recently filed applications for a BTC ETF. Goldman Sachs has other crypto-related products like OTC Bitcoin options and is planning the same with Ethereum.
The Goldman Sach entrance into the BTC-backed loans business is good for the crypto industry, especially regarding legitimacy, liquidity, and optionality. But, this is not entirely the first time a BTC-backed loan has worked in the crypto space. There have been cases of crypto projects accessing fiat loans using their crypto stash as collateral.
Argo, for instance, a mining company announced in June 2021 that they acquired a $20 million loan using their BTC stash as collateral. Argo accessed this BTC-backed loan from Galaxy Digital financial institution. Argo crypto mining firm used the fiat loan to pay for their operating expenses.
Other banks like Morgan Stanley, Jefferies Financial Group, and BlackRock have also made huge investments in crypto. Wallstreet and banking institutions are already embracing the digital class of assets. They are creating opportunities that will help expose customers to crypto.
