Goldman Sachs has reportedly dropped its plan of opening a bitcoin trading desk, at least in the near future, moving it down the list of products it’s set to offer in the cryptocurrency markets. The move comes as bitcoin dropped over 5% in about 90 minutes.
According to a report published by Business Insider, the Wall Street giant has decided to downgrade its plans over the cryptocurrency space’s regulatory landscape. The news outlet’s report, citing sources familiar with the manner, noted Goldman Sachs’ bitcoin trading desk plans may be later on revived.
The company will, for now, focus on developing other projects like its crypto custody service, which could see the bank hold cryptocurrency and even track price changes on behalf of large institutional clients.
Goldman Sachs itself had been taking baby steps to enter the cryptocurrency space and launch its bitcoin trading desk. Back in October of 2017, reports suggested it was studying cryptocurrencies through with a group of employees, and in December it was claimed a bitcoin trading desk would be ready in June.
In April of this year, as CryptoGlobe reported, the Wall Street firm hired crypto trader Justin Schmidt as its head of digital asset markets. In May, the NYTimes reported Goldman Sachs was waiting for regulatory approval while figuring out how to deal with holding cryptocurrencies in a safe way.
At the time, Business Insider notes, Schmidt was considering trading bitcoin and not just derivatives, if Goldman Sachs managed to get regulatory approval. The outlet’s unnamed sources claim it now ran into a “regulatory roadblock,” without adding more details.
Its report suggests the bank was looking for regulatory developments that haven’t yet materialized. These would likely help protect the bank from the risks associated with trading and holding cryptocurrencies.
Various analysts believe Goldman Sachs’ move is behind bitcoin’s $400 drop that saw it dip below the $7,000 mark. Speaking to Bloomberg Mati Greenspan, a senior market analyst at eToro, stated:
The expectation of adoption by Wall Street has been a major theme for the cryptocurrency market for the last year, so any kind of updates on that can certainly move the prices. Even if it’s not true, it should be enough to cause a minor selloff like this in cryptocurrencies.
Goldman Sachs is notably still moving forward with its crypto custody service. This means it’ll be competing with the likes of Coinbase and BitGo. Other major Wall Street firms, including JP Morgan and Fidelity, are said to exploring similar products.