Goldman Sachs and other Wall Street banks explore Bitcoin-backed loans

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Goldman Sachs and other Wall Street banks explore Bitcoin-backed loans By Hannah perez

Knowledgeable sources told CoinDesk that at least a dozen large US banks are exploring cryptocurrencies as collateral for loans.

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Goldman sachs and other Wall Street heavyweights are exploring how to take advantage of Bitcoin to support institutional cash loans. This was revealed by people familiar with the matter exclusively to CoinDesk.

According to the report, the banks will not resort to Bitcoin cash (also called “physical”) to back loans; Instead, they will opt for synthetic products like futures.

The idea of ​​the banks is to emulate tripartite repo-type agreements, according to the publication. Tripartite repo operations are repurchase agreements at an agreed time and price in which an external agent facilitates the transaction between the buyer and the seller by taking custody of the guarantee. In this way, the third party guarantees the proper delivery of the cash and assets involved in the agreement.

Goldman was working to get approval for secured loans and tripartite buybacksaid one of the knowledgeable sources to CoinDesk. And if they had a settlement agent, then they were just making secured loans without Bitcoin touching their balance.“.

Bitcoin as collateral for loans

While the post doesn’t specifically mention the names of other banks involved, one of the people familiar said that at least a dozen Wall Street giants are involved.

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We’ve probably talked to half a dozen big banks about [préstamos respaldados por bitcoins]”A second person told CoinDesk who, according to the report, represents a large institutional business firm. That source also added:

Some of them are in the category of the next three to six months and others are further away. The interesting thing is that some of these banks will use their own balance sheet to make the loan. Others will distribute this.

The report notes that Goldman and this group is following in the footsteps of a road previously paved by institutions such as Silvergate and Signature, both of which have maintained a friendly stance with cryptocurrencies and that at the beginning of the year they announced cash loans backed by bitcoins.

Not only large banks have been interested in this type of product. Another source announced that it also A number of smaller lending institutions are considering ways to accept crypto as collateral. Non-bloated banks are also building in this tripartite lending area.“Said a third person to the middle.

Wall Street turns to cryptocurrencies

The report of CoinDesk He also mentioned that cryptocurrency companies Coinbase and Fidelity Digital Assets they could be the potential custodians, as some of the banks have been in conversation with those firms. Although neither company provided comments to the outlet; neither did he Goldman sachs.

US banks and savings associations received the green light to safeguard cryptocurrencies from clients last year to through a letter published by the Office of the Comptroller of the Currency (OCC). Although the questions remained at that time, this year, BNY Mellon and US Bank announced plans for custodial services of bitcoins.

In October, the president of the Federal Deposit Insurance Corporation (FDIC) said US regulators were exploring ways for traditional banks to maintain bitcoins. A month later, the agency issued a joint declaration with the Federal Reserve (FED) and OCC saying that the three agencies would provide greater regulatory clarity in 2022 for banking institutions interested in engaging with Bitcoin.

Exploring loan products based on Bitcoin it can be interpreted as part of a larger adoption trend seen recently among some of the largest banks in the United States. This year, renowned banking institutions as Morgan stanley and JPMorgan have ventured into the crypto space, offering for the first time exposure to Bitcoin to your high net worth clients.

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Hannah Estefanía Pérez’s version / Daily bitcoin

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