Since Bitcoin’s conception, banks have given crypto the cold shoulder, however recent developments suggest Wall Street is warming up to Bitcoin. Traditional financial institutions have watched from the sidelines as the price of Bitcoin has skyrocketed, however the fear of missing out (aka FOMO), may be shifting sentiment.
The buzz surrounding Bitcoin has finally gotten the attention of major institutions, with banking giants rushing to offer OTC bitcoin trading. Goldman Sachs is on route to cross this finish line first, with the hiring of Justin Schmidt, previously a full time crypto trader turned head of Sach’s digital assets markets.
“In response to client interest in various digital products, we are exploring how best to serve them in the space.” Galvin-Cohen, a spokeswoman for Goldman Sachs.
Crypto enthusiasts should not celebrate just yet however, as Goldman Sachs is slated to only offer Bitcoin derivatives. A full blown exchange or OTC trading platform is still under consideration, but the public will not be able to purchase or sell Bitcoin through Goldman Sachs as of yet. Instead, Sachs customers will be able to purchase Bitcoin futures from the CME and Cboe Global Markets Inc.
Sach’s hesitation to offer cryptocurrency trading, likely stems from security concerns. Storing a large amount of crypto requires incredibly sophisticated protection to deter hackers. With many online exchanges facing controversy over security breaches, Sachs may not want to deal with the legal ramifications surrounding lost coins.
The question remains however, what will happen to the cryptocurrency market when Goldman Sachs or another Wall Street giant open a bitcoin trading desk?
Online crypto exchanges are likely breathing a sigh of relief in response to Sach’s decision to only offer Bitcoin futures. While it is unknown how much online exchanges will be affected by the banks’ foray into crypto, it is clear that the average citizen will trust something they are already familiar with, which to the dismay of online exchanges, will likely be Wall Street.
The cryptocurrency market is still in the early stages of adoption. People are much more likely to place their capital in the hands of a traditional investment firm who has handled their family’s retirement funds for years.
While it is easy for those already educated about crypto to condemn the public for trusting centralized institutions with digital assets, we as a community must understand that Bitcoin is still an unfamiliar concept to most of the population. Having Wall Street and other banks process cryptocurrency may be the deal with the devil that could normalize crypto in mainstream markets.