Bank’s Bullish Bet on Bitcoin is Definitely a Big Step For the Crypto Market
Crypto-market Is Too Large to Ignore
Goldman Sachs keeps moving further with their plans to open the first bitcoin trading company that any Wall Street bank will likely follow. In the interview for CNBC, Spencer Bogart, a blockchain venture capitalist, says the cryptocurrency market is too large to ignore. “That’s what a lot of banks do, follow what Goldman does,” he said.
He then added: “Most of these banks have heard about the numbers or seen the numbers that companies like Coinbase and Binance are putting up, but there is a real risk that some of those companies could overtake some of Wall Street’s biggest banks if they don’t get in the market.”
Just for reminder, last week it was reported that Goldman Sachs is moving ahead with its plans to open the first bitcoin-trading firm of any bank on Wall Street. The move comes at a time when many banks have backed down from the crypto craze over regulatory concerns. Bogart called the bank’s bet on bitcoin bullish and said it is “definitely a big step” for the crypto market.
It came right after last week Priyanka Lilaramani, former Goldman Sachs Executive Director, has announced that she already had joined HOLD, a Maltese crypto startup, as a new CEO. Priyanka Lilaramani was a Director at Goldman Sachs for more than 10 years. In 2017, she was listed in the UK’s Innovate Finance FinTech Powerlist.
Following her appointment, she commented:
“The power and potential of Blockchain as a technology, and crypto currencies as an application is undeniable. It speaks to the power of people at scale and re-establishes how great causes are achieved. At HOLD, we have an ambitious roadmap and a lot remains to be done to make this a mainstream technology. But a few years from now, we will look back, and the technology world will divide into two categories — the enablers and the naysayers. HOLD will undoubtedly be in the enablers category.”
As an Angel Investor and an advisor she is known for her rigorous due diligence, and for setting a high bar for corporate governance and fiscal management. She serves on the Board and is a mentor to several high-growth companies. Most importantly, she has extensive experience with the peer-to-peer industry, particularly in the United Kingdom.
Goldman Sachs Changing Their Story
Today, many institutional investors still see cryptocurrencies as an incredibly risky asset given the wild fluctuations in price. Bitcoin, for example, hit a record high of over $19,000 in December but is currently trading at just over $9,400 at the time of writing. Most of the analysts now claim that 2018 could be the year that institutions begin to get involved in the space. But it wasn’t always like that.
It was not so long when we writed about Steve Strongin, Goldman Sachs Group Inc.’s global head of investment research who was saying that the tumble in cryptocurrencies that erased nearly $500 billion of market value over the past month could get a lot worse. In February, this year he said that he believes most cryptocurrencies shall fall to zero as current iterations are “too primitive” to be viable in the long term. Transactions, he says, are too expensive and lengthy, and cybersecurity issues plague the current cryptocurrency infrastructure.
“Whether any of today’s cryptocurrencies will survive over the long run seems unlikely to me, although parts of them may evolve and survive,” Strongin said. “Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.”
The Dark Side of the Crypto-World
However, Christine Lagarde, managing director of the International Monetary Fund recently addressed, what she calls “the dark side of the crypto world”. She says that whether Bitcoin’s value goes up or Bitcoin’s value goes down, people around the world are asking the same question: What exactly is the potential of crypto-assets?
“The technology behind these assets, including blockchain, is an exciting advancement that could help revolutionize fields beyond finance. It could, for example, power financial inclusion by providing new, low-cost payment methods to those who lack bank accounts and in the process empower millions in low-income countries. The possible benefits have even led some central banks to consider the idea of issuing central bank digital currencies” writes Lagarde.
She also noted that stopping money laundering and combatting terrorist financing has been part of IMF’s work for the last 20 years. “Based on the standards set by FATF, we have conducted 65 assessments of countries’ regulatory frameworks and provided capacity development assistance to 120 countries. Our efforts have focused on helping our member countries grapple with the specter of illicit financial flows. But we recognize more needs to be done to get a handle on the emerging threat posed by crypto-assets and to secure a stable financial system. Where can we start” asks Lagarde?
We can fight fire with fire
“We can begin by focusing on policies that ensure financial integrity and protect consumers in the crypto world just as we have for the traditional financial sector. Indeed, the same innovations that power crypto-assets can also help us regulate them. The volatility of crypto-assets has prompted an intense debate about whether they are a bubble, just another fad, or a revolution equivalent to the advent of the internet that will disrupt the financial sector and eventually replace fiat currencies. The truth is obviously somewhere in between these extremes“.
As she is saying, it would not be wise to dismiss crypto-assets but better to welcome their potential including recognizing of their risks.
“By working together, and leveraging technology for the public good, we can harness the potential of crypto-assets while ensuring that they never become a haven for illegal activity or a source of financial vulnerability”.