Investment bank Goldman Sachs has revealed the name of the first company in history to be granted a secured loan in Bitcoin.
Summary
The first collateralized loan in Bitcoin
On 3 May, the American investment bank Goldman Sachs announced the name of the company to which it has granted a loan with Bitcoin as collateral for the first time in history. It is the famous exchange founded by Brian Armstrong, Coinbase.
There has been much discussion for weeks about the renewed interest of investment banks in cryptocurrency-related products, and specifically in exploring the possibility of providing loans secured by cryptocurrencies.
A spokesperson for the investment bank commented on the news stating:
“The deal was interesting to Goldman because of its structure and 24-hour risk management”.
Meanwhile Bloomberg reporting the news described the loan as:
“A significant step for a major U.S. bank that accelerates Wall Street’s embrace of cryptocurrencies.”
According to Coindesk newspaper, at least 10 US investment banks are interested in evaluating products that are linked in some way to cryptocurrencies.
Crypto-related financial instruments grow
In late March, the bank negotiated a non-deliverable Bitcoin (BTC) option – a derivative linked to the BTC price that pays cash – with cryptocurrency investment bank Galaxy Digital. In early April, the firm expanded its OTC crypto options trading to include Ethereum (ETH)-based options contracts as well.
Meanwhile, investment bank analysts in January of this year predicted Bitcoin’s chances of surpassing $100,000, due to the fact that the most important digital currency will probably continue to take market share away from gold as a store of value.
Brett Tejpaul, head of Coinbase Institutional, told financial newspaper Bloomberg that:
“Coinbase’s work with Goldman is a first step in the recognition of crypto as collateral which deepens the bridge between the fiat and crypto economies.”
The financial value of the loan has not been disclosed but according to rumours it appears to have been secured by a portion of Coinbase’s total holdings of 4,487 BTC, worth around $170 million.
The investment company Arca commented on this news in a rather ambiguous way stating that:
“These types of bilateral agreements are rarely done in a vacuum. It is far more likely that Goldman is seeing a lot of demand for this type of transaction and is just testing the waters before making a bigger splash.”
