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After Barclays, Goldman Sachs Hesitates To Start Full-Fledged Trading Desk for Cryptocurrency

After Barclays, Goldman Sachs Hesitates To Start Full-Fledged Trading Desk for Cryptocurrency

Goldman Sachs Group appears to be not in a hurry to take a call on the full-fledged trading desk for cryptocurrencies. However, the company is planning to add a small and restricted number of derivatives in the digital coin segment. This is one more news from the banking side that is hesitating to take the plunge on the launch of virtual currencies trading desk. It is quite possible that the big banks are yet to see the kind of response that they expect to launch a trading desk.

Market-Making Capacity

Currently, Goldman Sachs Group is only trying to pioneer a new market on digital currency. That would enable it to launch bitcoin futures in a principal and market-making capacity. The company would establish non-deliverable forward products, Bloomberg reported. This would mean that the company is not ready to provide a platform wherein its clients could buy and sell any virtual currencies that are listed in cryptocurrency exchanges. This is despite strong beginning in the second quarter for digital currencies compared to the first quarter wherein prices have plunged from the preceding quarter.

The latest offering could not be termed as something new among the Wall Street firms. That is because some of them have already started providing futures from CME Group Inc. and Cboe Global Markets Inc. in December. The issue that is haunting in respect of buying and selling of any actual virtual currency is that there is a threat of being stolen by hackers. If the banks allow buying and selling of transactions, then they would have to specify as to how they would protect such assets. That might invite the regulatory issues. Therefore, the banks appear to be playing close to their chest on offering a full-fledged trading desk.

It all started with the hiring of Justin Schmidt by Goldman Sachs for the position of digital asset markets head. The company is trying to lend a helping hand to its clients get exposure to virtual currencies. In the initial stages, he would have to sit on the digital coin desk though it could not be confirmed officially by the company.

A New York Times report indicated that Goldman Sachs would provide forward contracts offering in the next upcoming weeks. That suggested that the company is well on track to execute its project. Last year, the company official reportedly indicated that it would have its new business starting its operations before the first half of the current year.

Barclay’s dithering

Significantly, Barclays too announced its decision that it will not launch a trading desk for cryptocurrency in the near term. Its CEO, Jes Staley, told his company’s shareholders that there was no truth in the rumors about the company trying to gauge clients’ interest in establishing a trading desk for digital currencies.

Like Goldman Sachs, Barclays to is offering services to its clients in respect of selling bitcoin futures with the help of other platforms. Though big banks are reportedly looking into the possibilities of entering the crypto-related market, they are not disclosing it openly. It appears that they are expecting either the market to cool down or the regulators to provide more clarity, especially the status.

About the author

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Brian Booker

An international financial analyst and writer. He has consulted for the Malaysian government, various MNC’s, and other organisations. He focuses on currencies, commodities, and emerging South East Asian markets.

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