Following the failure of the FTX exchange, which hurt valuations and reduced investor interest, Goldman Sachs announced plans to spend tens of millions of dollars to buy or invest in cryptocurrency businesses.
According to Mathew McDermott, head of digital assets at Goldman Sachs, the collapse of FTX has increased the demand for more dependable, regulated cryptocurrency players, and big banks see an opportunity to take up business.
He continued without providing more information that Goldman was conducting due diligence on a number of other crypto businesses.
After its abrupt collapse on November 11, FTX filed for Chapter 11 bankruptcy protection in the US, raising concerns about contagion and escalating calls for stronger regulation of the cryptocurrency industry.
Even while Goldman’s possible investment is modest compared to the Wall Street giant’s $21.6 billion revenue last year, it is clear from its desire to continue spending that it sees a long-term possibility.
Noel Quinn, the CEO of HSBC, stated last week at a banking conference in London that he had no ambitions to grow into retail client crypto trading or investing.
Moreover, 11 digital asset businesses that offer services including compliance, bitcoin data, and blockchain administration have received investment from Goldman.
Additionally, Goldman Sachs, MSCI, and Coin Metrics have established the data service datonomy with the goal of categorizing digital assets according to their intended use.
As McDermott stated, the company is also developing its own proprietary distributed ledger technology.
According to data website CoinMarketCap, the market for cryptocurrencies peaked at $2.9 trillion in late 2021, but has since lost around $2 trillion due to credit tightening by central banks and a wave of high-profile corporate failures. On December 5, it was last at $865 billion.
McDermott added that the fallout from FTX’s bankruptcy increased Goldman’s trading volume as investors sought to transact with regulated and well-capitalized counterparties.
He pointed out that Goldman also saw hiring opportunities as cryptocurrency and tech companies laid off employees, but the bank was currently OK with the size of its workforce.
However, others see the cryptocurrency collapse as an opportunity to expand their enterprises.
