Media reports on Goldman Sachs’ interest in bitcoin-collateralised lending products

Goldman Sachs and other US investment banks are considering a tri-party repo arrangement with Bitcoin futures as collateral. CoinDesk reports, citing sources.

Mike Novogratz’s Galaxy Digital, the crypto bank, is the partner. The latter is the investment bank’s agent in the crypto market for over-the-counter spot and futures trading, lending and the creation of structured products.

The bank is also considering other synthetic products that do not involve a spot exposure to Bitcoin, according to industry sources.

“Goldman Sachs has been pursuing authorization to lend in tri-party repo. Including a liquidation agent in the scheme would enable collateral without adding Bitcoin to the balance.”, sources said.

According to industry sources, Goldman Sachs is laying the groundwork for more integrated prime-brokerage services.

Currently, bitcoin-backed loans are offered by crypto-friendly banks Signature and Silvergate.

“We have discussed Goldman Sachs’ proposed plans with six major banks. Some expect to launch the product within the next three to six months. And there are those who are willing to take Bitcoin onto their balance,” a source told the publication.

In July 2020, the Office of the Comptroller of the Currency (OCC), part of the US Treasury, allowed national banks to provide custody services for cryptocurrencies.

Regulatory uncertainty persists. In May, an ‘interagency sprint’ began with the participation of the Fed, FDIC and OCC, which will continue into 2022.

The regulator group will issue guidance on legally permissible activities for banks related to cryptocurrencies.

Some of the surveyed banks named Coinbase and Fidelity as custodians in such deals.

In November, Citigroup announced the launch of a crypto-focused division within its institutional client services group.

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