A report revealed that the cryptocurrency exchange was the entity on the other side of Goldman’s historic Bitcoin loan.
coinbasethe popular US-listed cryptocurrency exchange, was the borrower of the recent deal that turned Goldman Sachs in the first large bank in the United States to grant a loan guaranteed by Bitcoin (BTC).
the news media Bloomberg revealed on Tuesday that coinbase received an undisclosed amount of cash after placing an undisclosed amount of bitcoin as collateral. The head of Institutional CoinbaseBrett Tejpaul, who confirmed the information to the communication agency, highlighted:
Coinbase’s work with Goldman is a first step in recognizing cryptocurrencies as collateral that deepens the bridge between fiat economies and cryptocurrencies.
A deal between Goldman and Coinbase
The news is the continuation of a historical fact for wall street and the cryptocurrency industry. Some days ago Goldman Sachs became the first major bank in the US to provide a cryptocurrency-backed loan.
According to a report by Bloomberg from that moment, the bank granted US dollars in exchange for a guarantee in BTC. A spokesman for Goldman he noted that the deal was interesting due to its structure and 24-hour risk management. Reports also suggested the move could be part of a new line of credit from the bank that is more than 150 years old.
The most recent report reveals the identity of the borrower, although the details of the agreement are still unknown. coinbasea reputable cryptocurrency exchange, said in a 2021 annual report that it held more than $566 million in cryptocurrency, including more than $183 million in Bitcoin. He also disclosed at the time holding $7.1 billion of cash.
Crypto-loans attract banks
Although loans backed by Bitcoin they are not something new for the cryptocurrency space, it is really new for wall street. In fact, the agreement Goldman it marks the first time that a bank of this magnitude has made an agreement of this type; a fact that seems to reaffirm the interest of wall street to bring cryptocurrencies closer to the traditional financial world.
In the cryptocurrency industry, some companies provide loans secured by digital currencies, and even other assets, including tokens non-expendable (NFT). As an example, Babel Finance allows mining companies to Bitcoin put up their machines as loan collateral to borrow cash.
According to Matthew Ballensweig, CEO and Co-Head of Trading and Loans at the crypto brokerage Genesisthese borrowers usually place Bitcoin with a loan-to-value ratio of 40% to 60%. The collateral is held by a qualified custodian, and borrowers receive dollars from the lender at an agreed interest rate, he explained to Bloomberg.
The terms can vary, as well as other prepayment terms, but it is a simple structure to attract institutional lenders to the market.
Genesis is part of the group of companies that has explored the crypto-lending sector, and according to Ballensweig, the firm has already structured similar loans with crypto-friendly banks, such as Silvergate Bank Y Signature Bank. “We are exploring similar structures with large investment banks that want exposure to the space“, said.
Goldman gains ground in the crypto space
The reports on Goldman They come at a time when the financial institution has been directing efforts to expand its offering of products related to the new asset class.
In March, it became the first major US bank to complete an over-the-counter (OTC) sale of a currency-linked instrument. Bitcoin, an operation carried out together with the financial company of digital assets Digital Galaxy. The bank has indicated that it seeks to expand its OTC offering to Ethereum.
The Wall Street titan, which has its own crypto division, has also been exploring tokenization of real assets more recently, in a first foray into the NFT trend. A few weeks ago, a manager from Goldman had already admitted that the bank is looking to offer a “full spectrum” of crypto investments, which could even include Bitcoin cash.
At the end of last year, a report by CoinDesk He announced that at least a dozen large US banks are exploring cryptocurrencies as collateral for loans. Goldman Sachs was one of those mentioned in that report.
Article by Hannah Estefanía Pérez / DailyBitcoin
Image edited from Unsplash
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