CEO of Goldman Sachs, David Solomon, has projected a “big evolution” in how the United States government regulates bitcoin and other cryptos, with regards to financial institutions.
During an interview with CNBC on April 7, Solomon was asked about the banking giant’s moves to adopt Bitcoin (BTC). Notably, the CEO kept his cards close to his chest but said that the bank is keeping a keen eye on digital currencies, amid growing demand for crypto exposure from its customers:
“We continue to think about digital currency and the digitization of money in a very proactive way, and in that context, we are engaged with our clients and we look at all this through the centricity of ‘what do our clients need?’.”
The current United States restrictions surrounding financial institutions forbid them from providing direct exposure to risky and volatile asset classes like Bitcoin. Since these regulations deem cryptocurrency as a high-risk asset-class, the financial institutions can only provide exposure to cryptocurrency in the form of custody positions in digital assets like ETFs or securities.
Nonetheless, Solomon noted that the crypto space is evolving, and predicts this situation changing over some time. However, he did not want to speculate on what that entails:
“I think there will be a big evolution. As to how this evolves in the coming years, we operate in the rules we have, I’m not gonna speculate on where the rules will go for regulated financial institutions but we’re gonna continue to find ways to serve our clients as we move forward.”
More Bitcoin Exposure
The bank also announced last week that Goldman’s private wealth management division is almost offering BTC exposure to bigger clients with portfolios of at least $25 million. A “full-spectrum” of investment options in BTC and many other cryptos are set to roll in Q2 2021.
The former SEC chairman Jay Clayton also mentioned recently that the regulatory environment surrounding cryptocurrency is due for a shakeup, making use to similar terminology to Solomon:
“Where digital assets land at the end of the day […] will be driven in part by regulation—both domestic and international—and I’m speaking as a citizen now, that regulation will come in this area both directly and indirectly whether it’s through how these are held at banks, security accounts, taxation, and the like. We will see this regulatory environment evolve.”
The 2021 bitcoin bull market saw Goldman Sachs reopen its crypto trading desk in March after the financial institution originally setting it up in the 2017 bull run when bitcoin hit $20K and then crashed months later. Interestingly, the bank also filed for an ETF that comprises some BTC exposure on March 26.
Is this the beginning of widespread bitcoin adoption by the traditional financial institutions in the United States?