Many are anticipating the entry of institutional investors in the crypto world. And true enough, this could change the landscape of things for digital currencies. Regulatory clarity is said to be enough in order to bring institutional investors at play. In the past days, many were anticipating about the possible Bitcoin ETF approval. Unfortunately, the US Securities and Exchange Commission rejected the Winklevoss Bitcoin ETF application.
Goldman Sachs mentioned in its mid-year economic report that “cryptocurrency mania” is one of the six factors that have created an unsteady undertow that affected markets in 2018. Also, Sharmin Mossavar-Rahmani who works as the chief investment officer for Goldman Sachs mentioned that they are expecting a further decline in cryptocurrencies’ price. He also added that cryptos “do not fulfill any of the three traditional roles of a currency”.
Mixed Signals from Goldman Sachs
However, despite the report and their anticipation that cryptocurrency prices will worsen, Goldman Sachs is looking closely into offering custody services for investors. According to reports, the bank is looking to create securities that they will be holding on behalf of its clients. This is going to be a form of insurance in case of cyber-attacks on the holdings.
Though there is still no news when the product is going to go live, this is still a positive development in the world of digital currencies. This could lead Goldman Sachs into a new market and even offer prime-broker services. And also, this could potentially legitimize the crypto market, something that a lot of crypto investors are hoping for since the start of the year.
Positive Movement in the Crypto World
One scenario that could actually happen if this plan comes into fruition is a positive market movement for cryptos. This could lead to increased investor interest considering that it can potentially reduce the risk that investors take.
A spokesperson from Goldman mentioned to Bloomberg that “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”.
In May, there were also rumors that the bank is going to have a Bitcoin trading desk. This would make Goldman Sachs the very first major Wall Street bank to explore having a crypto trading desk.
If you will be asking Matthew Newton who works for eToro, he mentioned that this “shouldn’t come as a huge surprise to anyone who has been paying attention to cryptocurrencies”.
Regulatory Clarity
Instead of banning crypto activities, different countries have looked into regulating the market instead. For instance, the US Securities and Exchange Commission considered Bitcoin and Ethereum not as securities. In addition to this, you have the likes of G20 pushing towards a unified crypto regulation. And not only that, you even have Nasdaq looking to legitimize the industry by working with different crypto exchanges.
And also, even the European Parliament released a report saying that it’s a mistake to ban crypto activities. Rather, it is ideal to simply regulate the market.
This month, Bitcoin has been able to reach $8,500 only to drop recently back below $7,000. Could the recent development with Goldman Sachs improve the crypto market in the coming days?
