Goldman Sachs Offers First Bitcoin Collateralized Loan

US bank Goldman Sachs has announced its first loan secured in Bitcoin (BTC). The operation was revealed on Thursday (28), according to a statement by a spokeswoman for the bank to Bloomberg. The value of the loan was not revealed, nor what its use was, but the bank revealed that the borrower used its BTC as collateral. According to the spokeswoman, the high liquidity of the cryptocurrency and its risk structure led the bank to accept the loan. The move is a significant step forward for Goldman Sachs as Wall Street continues to embrace digital assets. Simultaneously, other US companies are starting to see the value of BTC as collateral and have started to adopt it in their operations. In fact, Goldman Sachs already has structures that allow its clients to invest in cryptocurrencies. However, this was the first time the bank had accepted them as collateral in a loan operation.

Bitcoin gains attention from big banks

The move is another sign that big banks are embracing cryptocurrencies in all areas. For example, Goldman Sachs already trades BTC on both the futures and over-the-counter (OTC) market. In the latter case, the bank was the first in the United States to carry out this operation. In early April, the bank decided to expand its operations to Ether (ETH), as reported by CriptoFácil. An OTC desk will be created so that the bank’s customers can trade cryptocurrencies. According to the bank’s analysts, the proximity of Ethereum’s pending ‘Merge’ has increased customer demand. As a result, Goldman Sachs intends to improve its structure and allow safe and instant trading. According to Mary Rich, Global Head of Digital Assets at Goldman Sachs, the bank wants to follow Morgan Stanley in offering cryptocurrency investments to its private equity clients. There is no forecast for the launch of services in the retail segment. Big banks are following in the footsteps of more specialized companies such as Jefferies Financial Group, which is expanding banking into cryptocurrencies. The asset manager Fidelity has also allowed its clients to invest in BTC for retirement.

Demand for Bitcoin as collateral grows

For Damien Vanderwilt, co-president of Galaxy Digital Holdings, accepting cryptocurrencies as collateral is the next step. Because they are highly liquid and easy to hold, cryptocurrencies are seen as one of the best potential collateral. Cryptocurrency-centric banks such as Silvergate Capital already offer loans with these guarantees. MicroStrategy made use of this service by taking out a loan of $250 million with its BTC as collateral. The company then used the money to buy another $190 million and increase its holdings of the cryptocurrency. This brings two major advantages. The first is to allow borrowing and avoid selling and capital gains taxes. The second is to have access to lower interest rates, since the loans have a real guarantee. Rafael Lima, head of Structured Operations at Rispar, commented on the measure. Fintech was the first in the world to provide this type of service, which is now gaining strength in other countries. According to the executive, the movement is just beginning.

“We are excited when we look at the traditional economy realizing that cryptocurrencies are great collateral, especially when a relevant player like Goldman joins this movement. We at Rispar saw this opportunity a long time ago, and we understand that it is a matter of time before other players adopt this new asset class”, he said.

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