Could Goldman Sachs Be The First Bank To Offer Bitcoin Trades?

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Goldman Sachs (GS) is reportedly considering developing a cryptocurrency trading operation, a move that would come as more investors seek exposure to forms of digital money like Bitcoin even as it meets resistance from regulators, economists and finance-industry executives.

Autoplay: On | OffAs described by the Wall Street Journal, which cited sources familiar with the situation, Goldman is in the early phases of the initiative, which could involve the bank’s strategic investment and currency-trading segments. The efforts might not materialize, the Journal said.

But the involvement of currency-trading and strategic investment divisions, the Journal added, indicates that Goldman “believes Bitcoin’s future is more as a payment method rather than a store of value, like gold.”

That future would differ dramatically from the one predicted by JPMorgan Chase (JPM) CEO Jamie Dimon. Dimon in recent weeks has said Bitcoin “will end badly” and would likely be relegated to the black market, arguing governments would be unwilling to tolerate a currency that operates outside of regulatory boundaries. He also said he’d fire anyone at JPMorgan caught trading Bitcoin.

While banks have been more open to blockchain, the record-keeping technology that underpins Bitcoin transactions, a trading platform on a large U.S. bank would mark the biggest embrace yet of digital currencies. Bitcoin was up 2.1% to $4,415.95 on Monday.


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Elsewhere in the financial world, Morgan Stanley (MS) CEO James Gorman told the Journal last month that the Bitcoin market was “obviously highly speculative, but it’s not something that’s inherently bad.”

CBOE Holdings (CBOE) has said it plans to introduce Bitcoin futures. Fidelity Investments is testing out a project that makes data on consumer digital cash holdings available on Fidelity.com. Exchange-traded-fund giant ProShares has asked the SEC to approve to Bitcoin ETFs, while the regulator earlier in the year rejected one proposed by twins Cameron and Tyler Winklevoss.

Regulators in some nations have been concerned about security risks and scams. China has banned initial coin offerings and has ordered cryptocurrency exchanges in the nation to stop trading. South Korea has also said it would ban ICOs, and the SEC has said securities law may apply to such offerings.

Bitcoin’s price has swung wildly on the crackdown in China and the comments from Dimon and others. Some analysts say the digital’s price volatility will ease as the market for it grows.

Banks in recent months have struggled with low market volatility, hurting results from their trading desks. Goldman has said that it has misplayed the market in its trading division.

Goldman Sachs rose 1.5% to 240.65 in the stock market today, hitting its best level since late March as it builds the right side of a base. Morgan Stanley advanced 1.6% to 48.92, moving just above a shallow cup-with-handle base with a 48.59 buy point. JPMorgan climbed 1.4% to 96.84, still within buy range of a flat base with a 95.32 buy point.

 

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