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Most financial institutions have tried to stay away from the cryptocurrency market, yet with Goldman Sachs moving ahead and setting up what looks to be first bitcoin trading desk from a Wall Street bank, it’s likely that other banks will follow.
Spencer Bogart, a partner at Blockchain Capital, said that other banks will follow Goldman Sachs’ example in opening a crypto trading desk, according to CNBC’s Fast Money today, May 4.
Goldman Sachs reported yesterday that they would soon open a trading desk for Bitcoin (BTC) contracts after being “inundated” with client requests.
Although Bogart told CNBC that the news is “definitely a big step,” he doesn’t think that it’s a “perfect solution, that all of a sudden now just opens the floodgates to the institutionalization of Bitcoin.”
Bogart added that his reasoning that banks will follow Goldman Sachs is not particularly because of the Goldman Sachs name, but because “this market is so large you can’t ignore it anymore”:
“Most of these banks have heard about the numbers or seen the numbers that companies like Coinbase and Binance are putting up. There’s 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.”
As Goldman Sachs will currently only be working with derivatives products, Bogart noted that the next problem to solve will be custody, in the event that Goldman Sachs would add direct trading of Bitcoin.
When asked about the future of cryptocurrency, Bogart told CNBC that the most important question to answer is about the crypto “flow,” which he believes will see an addition of new buyers:
“Is the flow going to be greater from hodlers to non-hodlers, or from non hodlers to hodlers?”
Earlier this week, it was reported that Goldman Sachs was taking steps to use its own money to trade with clients in a number of contracts linked to the price of bitcoin, reported The New York Times. Notably, though, while the Wall Street bank won’t be buying or selling the coins to begin with, a team at the bank is thinking about going in that direction if it can get regulatory approval. Goldman Sachs has also made its first hire in its cryptocurrency markets unit, signalling its seriousness in helping clients to invest in digital currencies.