Goldman Sachs To Spend Tens of Millions of Dollars On Crypto Firms

A Goldman Sachs logo is displayed on the floor of the New York Stock Exchange in New York City.

Ramin Talaie / Contributor / Getty Images

Following the collapse of the FTX, Goldman Sachs (GS) is planning to invest in crypto companies for tens of millions of dollars.

Key Takeaways

  • Goldman Sachs plans to spend tens of millions investing in crypto firms.
  • The bank sees an increased need for trustworthy players in the industry and takes advantage of the crisis.
  • Currently, the banking giant has invested in 11 digital asset companies.

Turn a Crisis Into an Opportunity

The fall of crypto exchange FTX is just the latest in several high-profile bankruptcies this year, but Goldman’s willingness to invest in the sector shows that it sees potential in the sector. According to David Solomon, CEO of Goldman Sachs, while cryptocurrencies are "highly speculative," he is bullish on the underlying technology as its infrastructure develops more.

Big banks are taking advantage of the opportunity, said Goldman's head of digital assets, Mathew McDermott.

"We do see some really interesting opportunities, priced much more sensibly," McDermott said in an interview last month.

Bank Focuses On Crypto

Thus far, the banking giant has invested in 11 digital asset companies. McDermott’s team has grown to include a seven-person crypto options and derivatives trading desk. Together with MSCI and Coin Metrics, Goldman Sachs launched datonomy, a data service designed to classify digital assets by use. McDermott said the firm is also developing its own private distributed ledger technology.

The Bottom Line

Goldman Sachs' announcement comes at a time when Standard Chartered predicts Bitcoin could drop below $5,000 next year due to underpricing by investors. The value of bitcoin has already declined by more than 75 percent since last year, and if the crisis worsens, giant banks like Goldman Sachs might be able to take advantage of the situation.

Article Sources
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  1. Reuters. “Exclusive: Goldman Sachs on hunt for bargain crypto firms after FTX fiasco

  2. Goldman Sachs. “Goldman Sachs, MSCI, and Coin Metrics Collaborate to Introduce DatonomyTM, a Taxonomy of Digital Assets

  3. Bloomberg. ''Bitcoin Sinks Further 70% in Standard Chartered List of Possible 2023 Upsets''
  4. CoinGecko. ''Bitcoin Price''

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