GOLDMAN MAY ROLL OUT CRYPTO CUSTODY SERVICES: Goldman Sachs is exploring offering custody services for crypto funds, according to people familiar with the matter cited by Bloomberg. This would result in Goldman holding cryptos on behalf of the funds, providing secure storage for clients. There is no launch date for the new offering yet, and the announcement comes after Goldman said in May that it would launch crypto-related trading options, including derivatives, to allow customers to buy contracts related to price fluctuations in Bitcoin. Offering custody for cryptos seems to be a new movement on Wall Street — Bank of New York Mellon, JPMorgan Chase, and Northern Trust are also looking into offering such services, says Bloomberg.
Custody services are much-needed to help drive institutional investment in cryptos. Securely storing digital assets is a major concern for firms, and has perhaps been a barrier to entry — custody services are commonly available for other financial instruments, yet have been lacking in the crypto sector. By offering such services, Goldman and others could help make investing in cryptos more accessible for financial institutions (FIs) wanting to engage responsibly with the nascent asset class. Additionally, by getting into the business of storing cryptos, Goldman could position itself well to drive uptake of any future digital asset services it deploys.
Coinbase rolled out crypto custody services earlier this year, but Goldman moving into the space may be a gamechanger. Although Coinbase’s services are likely helping to drive adoption of cryptos among FIs, these investors are probably far more likely to trust a Wall Street giant like Goldman. Moreover, if this move is simply a preview of what’s to come from Goldman and other incumbents — we reported in April that around one in five financial firms surveyed by Thomson Reuters were considering launching crypto trading services in the next year — we could be on the verge of a major shift toward the mainstream for the industry.