Following the collapse of the FTX exchange, which hurt valuations and reduced investor interest, Goldman Sachs (GS.N) announced plans to spend tens of millions of dollars to buy or invest in cryptocurrency businesses.
According to Mathew McDermott, head of digital assets at Goldman, the collapse of FTX has increased the demand for more dependable, regulated cryptocurrency players, and big banks see an opportunity to pick up business.
Goldman Sachs is doing due diligence
He resumed without delivering more details, “Goldman is conducting due diligence on a number of different crypto firms.” “We do see some really interesting opportunities, priced much more sensibly.”
After its abrupt collapse on Nov. 11, FTX filed for Chapter 11 bankruptcy protection in the US, raising concerns about contagion and escalating calls for more regulation of the cryptocurrency industry.
“It’s definitely set the market back in terms of sentiment, there’s absolutely no doubt of that.” “FTX was a poster child in many parts of the ecosystem. But to reiterate, the underlying technology continues to perform.”
McDermott said
Even though Goldman Sachs’ potential investment is modest compared to the Wall Street giant’s $21.6 billion revenue last year, it is clear from its willingness to continue investing that it sees a long-term opportunity.
While he considers cryptocurrencies to be “highly speculative,” its CEO David Solomon told CNBC on Nov. 10 as the FTX drama was playing out that the underlying technology has great potential as its infrastructure becomes more formalized.
Noel Quinn, CEO of HSBC (HSBA.L), stated last week at a banking conference in London that he has no plans to expand into retail customer crypto trading or investing.11 digital asset businesses that offer services like compliance, cryptocurrency data, and blockchain management have received investment from Goldman.
McDermott, a triathlete in his free time, joined Goldman in 2005 and quickly advanced to lead the division of its digital assets after leading cross-asset financing.
His team now numbers more than 70 individuals, including a trading desk for cryptocurrency derivatives and options with a staff of seven. Additionally, Goldman Sachs, MSCI, and Coin Metrics have launched the data service datonomy with the goal of categorizing digital assets according to their intended use.
According to McDermott, the company is also developing its own proprietary distributed ledger technology.