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The Smart Money: Goldman Sachs Eyeing Crypto Custody

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One of the biggest complaints regarding institutional adoption of cryptocurrency is trust.

After all, holding virtual currencies in an exchange on the other side of the world can often be risky. That’s especially true with constant reports of hacked exchanges.

However, the trust issue may soon change.

That’s because Goldman Sachs may offer custody services for cryptocurrency funds.

That means Goldman would hold the securities on behalf of the funds, which then cuts the risk for clients worried about potential loss. Should that happen, the bank could provide quite a boost to the number of funds betting on virtual currency.

The best part — Goldman wouldn’t be the only bank to enter the custody space.

Earlier this year, Nomura created a custody consortium called Komainu. Bloomberg also notes that Bank of New York Mellon Corporation, JP Morgan Chase, and Northern Trust are “working on cryptocustody services or exploring it.”

Wall Street Quickly Embracing Cryptocurrency

Granted, Goldman once warned that virtual currencies were in a bubble.

But times have changed. Not only is it looking into custodianship, it started trading Bitcoin futures launched by the CBOE and CME.

When asked about the chances of crypto to become a “real issue,” Goldman Sachs CEO Lloyd Blankfein said that the adoption of cryptocurrencies like Bitcoin could happen like the adoption of paper money, which replaced gold and silver coins.

Over all, Wall Street’s embrace of digital currencies is only intensifying. This is happening as institutions attempt to capitalize on its growing, mass adoption. Coinbase, for example, believes that institutions, not retail traders, will lead the next bull market.

With the Intercontinental Exchange (ICE) also entering the race for custody, the cryptocurrency market could be one of the most explosive.

Even the NASDAQ is open to becoming a platform for trading cryptocurrencies. “Certainly Nasdaq would consider becoming a crypto exchange over time,” Nasdaq CEO Adena Friedman told CNBC. “If we do look at it and say & ‘it’s time, people are ready for a more regulated market’ for something that provides a fair experience for investors.”


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