Goldman Sachs Can't Yet Hold Customers' Digital Assets

Goldman Sachs Group Inc. isn't yet ready to provide one of the salient services sought by customers still interested in cryptos despite the 2018 plunge in the prices of digital assets.

Justin Schmidt, the head of crypto markets at  Goldman Sachs,  revealed during a conference held in New York that:  

“One of the things they ask me is ‘Can you hold our coins?’ and I say ‘No, we cannot.” “One of the things we have to take into consideration when we’re building out our business is what we can and cannot do from a regulatory perspective.”   

Keeping Crypto Assets Safe   

The bank has been among the significant Wall Street financial institutions using alternative ways like investing in BitGo Holdings Inc. - a custodial service provider, in October this year to walk through the industry. It was one of the banks to clear Bitcoin (BTC) futures provided by Cboe Global Markets Inc. & CME Group. According to how Bloomberg reported in 2017, the firm was planning whether to begin a trading desk or to make markets in cryptos.   

From a regulatory point of view, Schmidt said that there are things which are very limited in how they can be offered and that customers are somewhat curious, especially about the space and its volatility and how to maintain assets safely.   

BTC, the flagship crypto, has dived over 40% this month. It's down over 80% since 2018 started, when it traded at almost $18,000. At press time, it's changing hands at $4,319.   

    

What is Custody?   

Schmidt revealed that progress has been seen in the crypto industry, and he referenced Bakkt's futures exchange & Fidelity's rise in the digital currency world with a new business to handle cryptos for hedge funds, trading companies and family offices.   

However, institutional investors want to be cautious and high advancement has to be put on the custody level, he revealed, citing Goldman's ability to hold securities acting for funds. 

“Custody is this foundational piece that is absolutely necessary,” he said. “Custody is part of an overall integrated system where different parts need to work well with each other and safely with each other and you have to be able to trust all the different parts in that chain, from buying something to transferring it to storing it in for the long-term.”   

Once queries over custody are answered, the cryptocurrency world could experience extra problems, including the demands of trust in all exchanges, due to risks such as hacking. 

In August, however, Goldman Sachs came out to say that it was willing to put Bitcoin in its futures though it never specified the actual date, according to a Coinidol report.