Published: Fri, September 07, 2018
Economy | By

Goldman Sachs shelves plans to build a crypto trading desk

Goldman Sachs shelves plans to build a crypto trading desk

The financial giant has apparently cooled on last year's plans to launch a trading operation for cryptocurrencies.

Bitcoin, the largest cryptocurrency by market cap, is down 12.4% in this period according to CoinMarketCap and is now trading at $6,426. According to Business Insider, around 5:50 a.m. EST, Bitcoin, which was valued at $7,350 in the early hours of the east coast trading day, lost more than $200 in value in a matter of minutes, and within an hour dipped below the "psychologically significant" $7,000 mark.

A number of reports from Business Insider claim that U.S. investment bank Goldman Sachs is ditching plans to open a desk for trading cryptocurrencies.

"Executives have concluded that many steps still need to be taken, majority outside its control, before a regulated bank would be allowed to trade cryptocurrencies", they write.

Cryptocurrency markets seemed to respond negatively to the news. From skyrocketing valuations and market caps, cryptocurrencies have come way back down to earth. It was originally planning to launch the trading desk this summer.

The biggest problem for financial institutions that want to buy and sell bitcoin is that the centralized exchanges the asset trades on have a history of being vulnerable to hacks.

While speaking at the TechCrunch Disrupt conference in San Francisco, Chavez emphasized that Goldman Sach's exploration of the digital asset class is an ever-evolving process and is in response to significant client interest.

The future regulatory framework for digital coins remains unclear, and the US Securities and Exchange Commission (SEC) has warned some coins issued in initial coin offerings might be regarded as securities. The availability of crypto custody services from reputable firms has been referred to as a key requirement for bringing institutional investors into the crypto market.

Goldman has been making a clear and steady effort to capitalize on crypto markets. Goldman hasn't confirmed the report, but the news still sent the value of bitcoin plummeting. At the time, Circle was built specifically to allow bitcoin trading, but the company has since become a payments enterprise and recently acquired cryptocurrency exchange Poloniex.

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