Despite the recent FTX collapse, Goldman Sachs is set to continue buying crypto firms in the future, according to a new report. The report claims that Goldman is "seeing opportunities in the crypto space as tech companies and crypto firms shed their staff."
FTX's downfall has eroded sentiment and set the market back
FTX, a US-based crypto exchange, filed for Chapter 11 bankruptcy protection on November 11, triggering a domino effect that has shaken up the crypto industry. The collapse has sparked fears of crypto contagion, and calls for more regulation. It also highlighted the need for more credible players in the space.
Goldman Sachs, the world's largest investment bank, plans to invest millions of dollars in crypto companies. It has already taken a stake in Elwood Technologies, CertiK, TRM Labs, Coin Metrics and a number of other companies. The investment bank has also announced plans to launch a datonomy data service to provide the crypto community with comprehensive data about cryptocurrencies. It also plans to reopen its crypto trading desk and is reportedly planning to buy several crypto firms.
In the wake of FTX's collapse, Goldman Sachs' head of digital assets, Mathew McDermott, said the bank is actively looking for "interesting opportunities" in the space. He also noted that "the crypto space has an opportunity for banks" and that "as banks look for opportunities to engage in financial technology, they will find interesting opportunities in the crypto space." McDermott's team includes a seven-strong crypto derivatives trading desk, as well as a "cross-asset" financing team that led the way in launching a datonomy data service.
Goldman's head of digital assets believes that the "biggest opportunity for banks" in the space is to "develop and invest in private distributed ledger technology" - technology that could be used to secure transactions and facilitate financial services. He said that "there is a great deal of underlying technology that could be adapted to improve the way financial services are conducted and to address key challenges."
The FTX collapse has also spurred calls for more regulation of the crypto industry. A recent report from the Treasury Department emphasized the need for "effective guidance on bank-fintech partnerships." The report also outlined a number of recommendations, including a coordinated approach to credit underwriting and the ability for firms to access Federal Reserve master accounts. Despite the hype around the FTX fiasco, it does not appear that the US Congress has made any progress in this area.
Goldman sees recruitment opportunities as crypto and tech companies shed staff
Despite the mass layoffs at tech and crypto companies, Goldman Sachs executives believe there are still plenty of opportunities for recruitment. Last week, the bank announced it was launching a datonomy data service for digital assets, which aims to classify digital products and services based on their usage and usage patterns.
Goldman Sachs is also scouting for an associate to work in its digital assets legal group and a vice president to work on its private distributed ledger technology. The bank also plans to invest tens of millions of dollars in crypto companies.
In the past two years, banks have added nearly 1,000 crypto job positions to their workforce. Citigroup, Bank of America, JPMorgan Chase, and Wells Fargo have all hired dozens of crypto professionals. The banks have also been aggressive in their hiring of quant talent. In January, Jackie Shen joined Goldman Sachs' Quant Risk Officer team. A spokesperson for the bank declined to comment on the report.
In the first half of 2019, the stock market saw its worst performance in over 50 years. The market also entered a bear market, which saw the value of cryptocurrencies drop by nearly half. Bankruptcies and the failure of major digital asset exchanges like FTX sparked fears of the cryptocurrency market's contagion. These issues prompted an increase in regulation.
However, the bear market has also led to record low mortgage rates, which has helped drive up the value of homes. The housing market is now facing upheaval. It has also led to the loss of hundreds of workers at mortgage-related companies, including Wells Fargo and JPMorgan Chase.
The prolonged bear market has also wiped out 25 digital asset exchanges. The recent collapse of the FTX exchange sparked calls for regulation. This has made investors nervous about storing funds at crypto exchanges.
Legacy financial institutions have made a number of unflattering statements about cryptocurrencies. JPMorgan Chase's CEO Jamie Dimon warned investors in June that the bank was bracing for volatile markets. He also stated that the bank would not expand into retail crypto trading.
Goldman Sachs, however, is investing in 11 digital asset startups. It also launched a datonomy data service and plans to develop its own private distributed ledger technology.
Binance backs out of plans to acquire FTX's non-U.S. businesses
FTX is a cryptocurrency exchange founded by Sam Bankman-Fried, a 30-year-old American billionaire. The company has a valuation of $32 billion and counts Coinbase Ventures, BlackRock, Sequoia Capital, SoftBank and Insight Partners among its backers. The company was featured in a Super Bowl ad and is said to have spent millions on naming rights for sports stadiums.
Earlier this year, the company raised about $2.2 billion in several funding rounds. It has invested in several crypto startups, including LayerZero, YugaLabs, and 1inch Network. Its headquarters are located in the Bahamas.
The company has also been dragged into a slew of investigations by authorities in various countries. This includes a pending Internal Revenue Service investigation. In addition, the company is under scrutiny from the Commodity Futures Trading Commission and the U.S. Justice Department, both of which are looking into possible violations of money laundering rules.
Binance is a massively popular crypto exchange. It has over 120 million users, and controls about half the market. This makes it one of the biggest companies in the industry. The company has also made an effort to expand into new markets. It recently acquired Sakura Exchange BitCoin (SEBC), which is registered in Japan. This is the company's first license in East Asia.
CoinDesk reported that Binance was the first to announce plans to acquire FTX, but the deal didn't last long. After announcing the acquisition, FTX suffered a liquidity crisis. This caused the price of its native token, FTT, to plummet. It also sent the other coins down.
Binance's CEO, Changpeng Zhao, also announced that the company would be selling its holdings in the FTT token. It's not clear if this is a legitimate attempt at a publicity stunt, but the gesture was a logical one.
The Binance-FTX deal was expected to be finalized last Wednesday, but it's been pulled apart by a flurry of activity. Coinbase's Brian Armstrong told investors Tuesday that if the deal goes through, FTX customers would likely lose money. However, the company has not officially disclosed the financial terms of the transaction.
The Binance-FTX deal is a clear sign that the crypto industry is on the brink of crisis, and the company's CEO has made it clear that he is prepared to do anything to save his company.
Goldman launches data service to properly classify digital assets
Earlier this year, Goldman Sachs launched a data service to help investors analyze and classify digital assets. The firm collaborated with the crypto data firm Coin Metrics to develop the service. The data service can be used by institutional investors to understand the performance of digital assets.
The digital asset space has grown rapidly over the past few years. The space is also driven by technological change and innovation. It is also subject to geopolitical developments that can increase volatility in global financial markets. As such, the need for risk management and performance tracking has become increasingly important. Goldman Sachs is aiming to bring the industry closer to standardization with the service. It will also help investors understand the risks associated with the assets.
The data service is available as a subscription-based data feed or through Goldman's digital storefront for institutional investors, Marquee. The service can also be used for benchmarking and research. It helps investors evaluate the risks associated with digital assets.
The data service is also being developed in collaboration with the global index provider MSCI. MSCI's solutions will help investors understand emerging opportunities in the digital asset space. It also provides a standardised approach to viewing the digital asset ecosystem. The company's single-digital-asset indexes are the foundation building blocks for its blended indexes. The indexes are used by institutional investors to assess emerging opportunities. The service will also provide a way for investors to create investment products based on sectors.
Goldman Sachs has also worked with the Swiss-based company Menai Financial Group to develop digital assets solutions. The company is a leading provider of institutional-grade digital-asset products and services. The company's expertise in the digital asset space informs MSCI's solutions. The firm's expertise in quantitative investment strategies is also used to calculate the indexes. This allows MSCI to develop digital assets solutions that help investors assess emerging opportunities and evaluate risks.
The service can be used by institutional investors to monitor and benchmark the performance of digital assets. It can also be used to create new products and services. Goldman Sachs is aiming to make the digital asset space more standardized.
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.