Goldman Sachs and other Wall Street moguls show signs of increased interest in cryptocurrencies
Image: Shutterstock
Global investment banking giant Goldman Sachs has given its first bitcoin-backed loan to a borrower, and the move is being touted as a major step toward institutional adoption of cryptocurrencies by Wall Street. Last month, Goldman Sachs successfully traded its first over-the-counter bitcoin options to Galaxy Digital.
Goldman Sachs allowed one of its customers to receive a cash loan backed by Bitcoin as collateral for the first time in its history. The loan was granted by the secured lending facility of the bank.
A bank spokesperson said in an email, “We recently extended a secured lending facility where we lent fiat collateralized on BTC; BTC being owned by the borrower. The interesting piece for us was the structure and the 24-7-365 day risk management.”
The bitcoin-backed loan allows the BTC holder to present their BTC as collateral to the bank and borrow fiat currency such as the USD in return. Given its unique structure and 24-hour risk management, the loan is of particular interest to the banking giant. These loans can be riskier than regular asset-backed loans, given Bitcoin's volatility. If the BTC price drops too low, the borrower may have to increase the collateral to avoid getting liquidated.