The financial group has a new global head of cryptocurrency strategy. Last May, the bank said that Bitcoin is not an asset class or a good investment.
Financial group and investment bank Goldman Sachs could launch its cryptocurrency, as long as the project is commercially viable. The institution is currently exploring the possibility of issuing, managing, and determining potential use cases for a new token.
Mathew McDermott, the new global head of Goldman Sachs’ cryptocurrency or digital assets department, recently revealed this information. The executive admitted that the bank intends to create a token, but this process is at a very early stage as they are still studying potential use cases.
The director believes that the current financial system will be different in the next 5 or 10 years. All traditional assets and liabilities would become part of blockchains. In other words, operations would be fully digital and would use (public or private) distributed ledgers for greater security and transparency. The intention would be to give preference to this type of platform over centralized or partially decentralized databases.
As McDermott sees it, the landscape includes a new system in which all transactions can occur within a blockchain. It would be a transformation for the issuance of debt, loans, mortgages, credits, and the transfer of assets.
However, the executive sees an obstacle that they must overcome to reach that level of adoption. It would be necessary to create a consensus with the rest of the banks, institutional investors, and regulators, which initially seems complicated.
If an advance of this type were to occur, the executive is aware that all the banking, financial, and office work apparatus would change forever. He confirmed that “with any technological advance, there will be an interruption to the existing status quo.”
McDermott has reportedly recruited staff from the JP Morgan Chase Bank involved in the creation of the JPM Coin, the first crypto asset of a relevant bank. Sources close to the bank said that Goldman Sachs hired JPMorgan’s chief digital asset strategy officer, Oli Harris.
Goldman Sachs, Bitcoin, and Contradictory Messages
The fact that Goldman Sachs has a digital asset or cryptocurrency division is a clear sign that the institution does not want to fail to take advantage of its potential. McDermott’s recent appointment as a new strategist and their plans to issue a possible token reinforces this view.
The bank’s recent actions seem to indicate that it is “paddling” in favor of Bitcoin, but the messages that it sends are still contradictory. Last May, Goldman Sachs stated that Bitcoin was not an asset class or a good investment, especially because of its volatility, young infrastructure, and susceptibility to hacking.
Regarding the first cryptocurrency, the bank stated that it did not recommend the use of Bitcoin on a strategic or tactical basis for its customers’ investment portfolios; however, its volatility could lend itself to impulsive traders.
In 2018, Goldman Sachs had postponed its plans to trade cryptocurrencies as there was no clear regulatory framework. At the time, they reported that there was interest in crypto assets, but their priority was to design a cryptocurrency custody service for their institutional investors.
By Alexander Salazar