According to Daniel H. Gallancy, the CEO of SolidX Partners, it was unrealistic to anticipate Goldman Sachs to run a Bitcoin business before the year’s end.
Speaking to Bloomberg, Gallancy, who has been working with a major investment firm in VanEck to introduce a Bitcoin exchange-traded fund (ETF) in U.S. markets, said that investors prematurely expected Goldman Sachs, Morgan Stanley, and other financial institutions in the U.S. to provide Bitcoin custodial solutions and operate digital asset exchanges.
He said:
The market had unrealistic expectations that Goldman or any of its peers could suddenly start a Bitcoin trading business. That was top-of-the-market-hype thinking.
Goldman Sachs is a Bit Different
Morgan Stanley, Citigroup, and many other large banks that were rumored to launch Bitcoin-related ventures by the end of 2018 were most likely not going to aggressively enter a market built upon an asset class that is still at its infancy.
But, Goldman Sachs, the $61 billion investment banking giant, has been preparing to offer Bitcoin services to its clients for awhile.
As CCN reported in June, for the first time in the company’s history, David Solomon, who is now the CEO of Goldman Sachs, directly confirmed that the bank has been clearing some Bitcoin futures for its clients with the intent of establishing a cryptocurrency trading desk in the foreseeable future.
“We are clearing some futures around Bitcoin, talking about doing some other activities there, but it’s going very cautiously. We’re listening to our clients and trying to help our clients as they’re exploring those things too. Goldman Sachs must evolve its business and adapt to the environment,” said Solomon in an interview with Bloomberg TV in China.
Although Goldman Sachs could clear Bitcoin futures with the assistance of CME, CBOE, and other established futures markets in the U.S. market, it cannot hold onto the cryptocurrencies owned by its investors or invest in the asset class on behalf of its clients without obtaining an approval to operate as a custodian.
In November, Justin Schmidt, a Goldman Sachs executive, said that the bank has not been able to receive approval from local financial authorities and in a period in which a bill pertaining to the legal definition of digital assets is still pending, it is risky for the institutions to provide services around the market.
“Custody is this foundational piece that is absolutely necessary. Custody is part of an overall integrated system where different parts need to work well with each other and safely with each other and you have to be able to trust all the different parts in that chain, from buying something to transferring it to storing it in for the long-term,” Schmidt said at the time.
Can Investors Expect Bitcoin Services in 2019?
It could have been unrealistic to expect Morgan Stanley, Citigroup, and many major banks in the global financial landscape to abruptly begin providing services on top of Bitcoin, and many of these institutions also likely saw a PR opportunity to alter their public image as some innovative and forward-thinking organizations.
However, some institutions like Fidelity and Goldman Sachs are seriously considering the long-term prospect of the market and in the long run, the two institutions could serve investors in the digital asset market.
Featured image from Shutterstock. Daniel Gallancy photo from LinkedIn.
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