DON'T BUY THE HYPE

It doesn’t look like Goldman Sachs will be trading bitcoin any time soon

Obsession
Future of Finance
Obsession
Future of Finance

Goldman Sachs’ entry into the bitcoin markets is the talk of the fintech world. This week, at a breakfast for industry players in the City of London the discussion—inevitably—turned to bitcoin. One participant argued that reports about the market’s shortcomings are overwrought because big players like Goldman are ready to start trading.

Goldman hasn’t confirmed its entry; yesterday both The Wall Street Journal (paywall) and Bloomberg reported that Goldman is exploring getting into bitcoin trading.

If the bank is indeed doing so, it’s news to the market’s main gatekeepers. Quartz spoke to two major bitcoin trading firms who have spoken to Goldman executives about bitcoin trading; both did not believe Goldman is in a position to start trading the cryptocurrency any time soon.

Executives at two of the firms, who declined to be named, said they had spoken to Goldman over the years about bitcoin trading and were surprised by the lack of knowledge displayed by the Goldman executives. One had spoken to the firm recently.

The firms said they spoke to the Goldman teams named in the Journal article, the currency trading and strategic investment units. “We have talked to them a number of times over the past two years. There has been little progress in their knowledge,” one executive said. “No doubt they are studying. But I highly doubt it’s anything imminent.”

The firms are two of the most well known over-the-counter brokers in the market, playing the critical role of matching big buyers and sellers with bespoke deals, bypassing exchanges. This gives such brokers a key insight into the sentiment driving the biggest investors in the industry. One such firm is Boston-headquartered Circle, which performs mobile payments using cryptocurrencies to reduce costs. It claims to be the second largest trader in bitcoin by volume, trading over $2 billion in cryptoassets in August. Its head trader, Dan Matuszewski, declined to comment when contacted by Quartz.

Goldman may be responding to the clamor of its clients for a slice of bitcoin’s rich returns, but it looks like the storied firm is taking its time to enter the volatile cryptocurrency markets.


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