A news report from the Wall Street Journal suggests that Goldman Sachs may be considering a major shift in its investment options. The big bank is reportedly deciding whether or not to allow its client investors to trade directly in bitcoin. If Goldman does adopt the new mode of trading, it would make the bank the first leading Wall Street outfit to allow investors direct access to the cryptocurrency space. While other companies offer a selection of cryptocurrency-related products, Goldman would upend the industry by opening a brand new marketplace in the space. A spokesman for the company indicated that "in response to client interest in digital currencies we are exploring how best to serve them in this space." What does that mean for the bank and for the banking world at large? (Related: Goldman Sachs Adds Blockchain Page To Main Web Site)
As more and more financial institutions become involved in the cryptocurrency industry, the likelihood that the U.S. federal government will step in with increased regulations over that space increases. If a big bank like Goldman opens up its doors to bitcoin trading, that could push that process along considerably faster. The Federal Reserve has already indicated that it is interested in studying cryptocurrencies in greater detail in order to make recommendations for regulatory changes at the governmental level.
Goldman May Make the Move to Increase Volatility
Coin Telegraph reports that Goldman has seen a major reduction in its revenues, with a 21% decline since last year, even in spite of the bull market for stocks which has taken place this year. The problem may be linked to volatility issues, as the firm has not been able to capitalize on buys and sells that take place within the market as a result of shifts in prices. If the cryptocurrency space offers a new avenue for investors, Goldman may be able to take advantage of the volatility which is built into that system. The Wall Street Journal indicated that "Goldman, once known as the nimblest trader on Wall Street, has struggled more than peers. Revenue in its fixed-income division fell 21% from last year through June, dragged down by poor performance in commodities and currencies."
That being said, it may be some time before Goldman actually makes any moves related to bitcoin trading. A report by Quartz suggests that the bank has not yet confirmed its entry into the space. The report suggested that Quartz contacted two major bitcoin trading firms, neither of which had any contact with Goldman executives about initiating new trading arenas prior to the news break. "Executives at two of the firms...said they had spoken to Goldman over the years about bitcoin trading and were surprised by the lack of knowledge displayed by the Goldman executives," the report summarizes.