Goldman Sachs CFO Clarifies Firm's Crypto Plans

Goldman Sachs has received a huge amount of unintentional publicity surrounding its efforts in the cryptocurrency and blockchain spaces recently, and a lot of it may have been due to miscommunication. CNBC reports that the company's Chief Financial Officer, Martin Chavez, described recent reports that the big bank is doing away with plans to launch a cryptocurrency trading desk "fake news." Speaking at the TechCrunch Disrupt Conference in San Francisco, Chavez helped to illuminate the ways that Goldman is exploring the digital currency and blockchain worlds.

Bitcoin Derivatives and More

Speaking about recent rumors that Goldman had decided to give up its plans to open a digital currency trading desk, Chavez explained that "I really have to describe that news as fake news." Although it remains to be seen exactly what a Goldman crypto trading desk will look like, the CFO did indicate that Goldman is working to develop a derivative for bitcoin because "clients want it." Chavez added that "the next stage of the exploration is what we call non-deliverable forwards, there are over the counter derivatives, they're settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges."

Goldman and Crypto

The latest information from Goldman has helped to fuel more speculation about how the firm will involve itself in digital currencies going forward. Back in October of 2017, outgoing CEO Lloyd Blankfein tweeted that the company was "still thinking about bitcoin," adding that Goldman was neither endorsing nor rejecting the cryptocurrency at that stage. Around the same time, a Goldman spokeswoman explained to CNBC that the firm was "exploring how best to serve [clients]" in the digital currency space as a result of client interest.

Chavez's recent comments highlight the reality that investors will likely have to remain patient to see Goldman's involvement in the digital currency realm take shape. "When we talked about exploring digital was going to be exploration that would be evolving over time," he indicated. "Maybe someone who was thinking about our activities here got very excited that we would be making markets as principal and physical bitcoin, and as they got into it they realized part of the evolution but it's not here yet."

Although Goldman has cleared bitcoin futures offered by CBOE for several months, the bank is concerned about a safe custody solution before it can get involved in physical bitcoin.

Investing in cryptocurrencies and Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns bitcoin and ripple.

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