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Goldman Sachs tower (skyscraper) New Jersey design by César Pelli
This morning, it was reported that Goldman Sachs will indefinitely postpone plans to launch a cryptoasset trading center, which was announced with great fanfare in December 2017 at the height of crypto-mania. the basis that the industry is scrambling.
One may wonder why there seem to be times when a bank speaks on both sides of the mouth. Fortunately, there is a scene from a 2002 film by Dennis Quaid titled "The Rookie" that accurately summarizes the prospects of banks when they think about getting involved in cryptoassets.
In the film, Dennis Quaid plays 40-year-old science teacher and baseball coach Jack Morris, who was once the former baseball prospect. He is participating in an open test for a Major League Baseball team, the Tampa Bay Devil Rays. After the test, which from his point of view went wrong, he had the following exchange with a Scout:
Scout: How long did you throw in the day?
Quaid: Slow enough for scouts to stop using the word quickly.
Scout: Well, you just rolled 98 miles per hour – twelve consecutive throws.
Quaid: No way …
Scout: Listen … if I call the office and tell them that I have a guy twice as old as these other kids, I'm going to make fun of me, but if I do not call in a fastball of 98 miles per hour, I'm going to get fired.
In many offices around the world, leaders, innovation managers and digital strategists face a similar dilemma. They know that if they even suggest or recommend that their institutions become involved in cryptoassets, they will be mocked or even scorned. In fact, at the beginning of the year, most major credit card issuers banned users from buying cryptoassets with cards after many failed to pay their balances. Reasons why are easy to list:
- An uncertain legal structure that creates nightmares for regulatory services
- Many ICOs have been found to be fraudulent or, at the very least, never deliver their promises
- There are few clearly defined use cases and the interest in the space is at best speculative
- Last year, many customers lost funds, resulting in further credit losses for the bank.
Yet this is only half of the story. Otherwise, it would be easy for banks to stop here and "let crypto be encrypted". On the contrary, the sector simply becomes too big to ignore. Most readers are probably aware of last year's bull market which saw the Bitcoin approach at $ 20,000 and the total market capitalization of the $ 700 billion cryptographic market. This momentum has resulted in a tidal wave of media coverage that has exponentially increased the interest in space. Although the market has shrunk dramatically to $ 225 billion, it has left a lasting legacy for consumers. In addition, he left the biggest impression on American youth. According to a study published by Coinbase this summer, 18% of students have at least some crypto. In addition, fintech's new competitors, such as Square, Revolut and Robinhood, are offering Crypto exposure to acquire members from the "emerging" clientele.
It is for these reasons that the institutions, despite their concerns and considerable reserves, continue to exercise due diligence and seek opportunities in this area. For example:
- Last month, Morgan Stanley hired a former banker from Credit Suisse to become "Digital Asset Market Manager"
- In May, JP Morgan served as head of the Crypto-Assets strategy, where the individual will look for cryptocurrency projects that will be marketed.
Goldman Sachs had been even more ambitious. Reports released in October 2017 indicate that the bank has formed an internal group of employees within its currency trading division to study cryptoassets. Subsequently, the bank announced in December 2017 its intention to launch a cryptocurrency trading desk, which was to start its activities this summer. This development came as a result of its decision to begin liquidating the bitcoin futures offered by Cboe Global Markets Inc. and CME Group Inc.
Expectations were high and the bank's willingness to move forward to discuss plans is one of the main reasons the market is responding so strongly to this reversal. At the time of writing, Bitcoin is down 5.3%, from nearly $ 7.4K to under $ 7K in the space of about two hours.
So, what does all this mean for the future of Goldman Sachs and Crypto in general?
Overall, it is clear that the growth and acceptance of crypto will continue to be a mix of stops and starts.
For example, it is important to note that despite this announcement, Goldman Sachs is not backing away completely from crypto. For example, the bank is open to launching the office at any given time. In addition, for the moment, she will concentrate her efforts on other less public services, such as the guard. This is a very important step because many institutional investors will be reluctant to negotiate encryption unless they are convinced that it is possible to protect it. However, this sector is becoming increasingly crowded as cryptography companies such as Coinbase and BitGo, as well as banks like JPMorgan and Fidelity, are considering similar offers.
It is likely that, even if the bull market persists, banks will continue to exercise due diligence and focus on areas such as custody or the use of cryptographic assets as currency for less publicized transactions. They also likely anticipate that OIC-funded startups will be eliminated, which will result in a more durable and less hyperbolic cryptographic environment.
In the long run, this will lead to a more stable and open cryptographic environment for all participants.
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Goldman Sachs tower (skyscraper) New Jersey design by César Pelli
This morning, it was reported that Goldman Sachs will indefinitely postpone plans to launch a cryptoasset trading center, which was announced with great fanfare in December 2017 at the height of crypto-mania. the basis that the industry is scrambling.
One may wonder why there seem to be times when a bank speaks on both sides of the mouth. Fortunately, there is a scene from a 2002 film by Dennis Quaid titled "The Rookie" that accurately summarizes the prospects of banks when they think about getting involved in cryptoassets.
In the film, Dennis Quaid plays 40-year-old science teacher and baseball coach Jack Morris, who was once the former baseball prospect. He is participating in an open test for a Major League Baseball team, the Tampa Bay Devil Rays. After the test, which from his point of view went wrong, he had the following exchange with a Scout:
Scout: How long did you throw in the day?
Quaid: Slow enough for scouts to stop using the word quickly.
Scout: Well, you just rolled 98 miles per hour – twelve consecutive throws.
Quaid: No way …
Scout: Listen … if I call the office and tell them that I have a guy twice as old as these other kids, I'm going to make fun of me, but if I do not call in a fastball of 98 miles per hour, I'm going to get fired.
In many offices around the world, leaders, innovation managers and digital strategists face a similar dilemma. They know that if they even suggest or recommend that their institutions become involved in cryptoassets, they will be mocked or even scorned. In fact, at the beginning of the year, most major credit card issuers banned users from buying cryptoassets with cards after many failed to pay their balances. Reasons why are easy to list:
- An uncertain legal structure that creates nightmares for regulatory services
- Many ICOs have been found to be fraudulent or, at the very least, never deliver their promises
- There are few clearly defined use cases and the interest in the space is at best speculative
- Last year, many customers lost funds, resulting in further credit losses for the bank.
Yet this is only half of the story. Otherwise, it would be easy for banks to stop here and "let crypto be encrypted". On the contrary, the sector simply becomes too big to ignore. Most readers are probably aware of last year's bull market which saw the Bitcoin approach at $ 20,000 and the total market capitalization of the $ 700 billion cryptographic market. This momentum has resulted in a tidal wave of media coverage that has exponentially increased the interest in space. Although the market has shrunk dramatically to $ 225 billion, it has left a lasting legacy for consumers. In addition, he left the biggest impression on American youth. According to a study published by Coinbase this summer, 18% of students have at least some crypto. In addition, fintech's new competitors, such as Square, Revolut and Robinhood, are offering Crypto exposure to acquire members from the "emerging" clientele.
It is for these reasons that the institutions, despite their concerns and considerable reserves, continue to exercise due diligence and seek opportunities in this area. For example:
- Last month, Morgan Stanley hired a former banker from Credit Suisse to become "Digital Asset Market Manager"
- In May, JP Morgan served as head of the Crypto-Assets strategy, where the individual will look for cryptocurrency projects that will be marketed.
Goldman Sachs had been even more ambitious. Reports released in October 2017 indicate that the bank has formed an internal group of employees within its currency trading division to study cryptoassets. Subsequently, the bank announced in December 2017 its intention to launch a cryptocurrency trading desk, which was to start its activities this summer. This development came as a result of its decision to begin liquidating the bitcoin futures offered by Cboe Global Markets Inc. and CME Group Inc.
Expectations were high and the bank's willingness to move forward to discuss plans is one of the main reasons the market is responding so strongly to this reversal. At the time of writing, Bitcoin is down 5.3%, from nearly $ 7.4K to under $ 7K in the space of about two hours.
So, what does all this mean for the future of Goldman Sachs and Crypto in general?
Overall, it is clear that the growth and acceptance of crypto will continue to be a mix of stops and starts.
For example, it is important to note that despite this announcement, Goldman Sachs is not backing away completely from crypto. For example, the bank is open to launching the office at any given time. In addition, for the moment, she will concentrate her efforts on other less public services, such as the guard. This is a very important step because many institutional investors will be reluctant to negotiate encryption unless they are convinced that it is possible to protect it. However, this sector is becoming increasingly crowded as cryptography companies such as Coinbase and BitGo, as well as banks like JPMorgan and Fidelity, are considering similar offers.
It is likely that, even if the bull market persists, banks will continue to exercise due diligence and focus on areas such as custody or the use of cryptographic assets as currency for less publicized transactions. They also likely anticipate that OIC-funded startups will be eliminated, which will result in a more durable and less hyperbolic cryptographic environment.
In the long run, this will lead to a more stable and open cryptographic environment for all participants.
