Goldman Sachs Is Considering a Custody Offering for Crypto Funds

News August 06, 2018 at 10:20 AM

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Goldman Sachs Group Inc. could offer a boost for the burgeoning universe of funds betting on cryptocurrencies.

The firm is considering a plan to offer custody for crypto funds, according to people with knowledge of the matter. That means the bank would hold the newfangled securities on behalf of the funds, reducing risk for clients seeking to guard against the threat of losing their investments to rogue attacks.

The deliberations are ongoing and no timeline has been set for when the firm will roll out the services, the people said, asking not to be identified because the information isn't public.

A formal offering from an institution like Goldman Sachs would provide a credible backing for crypto funds and could pave the way for more investors to bet on the asset class. Having a custody operation in place could also lead to other ventures, including prime-brokerage services, the people said.

"In response to client interest in various digital products we are exploring how best to serve them in this space," a spokesman for Goldman Sachs said. "At this point we have not reached a conclusion on the scope of our digital asset offering."

In May, Nomura Holdings Inc. joined other firms to create a custody consortium called Komainu. And at least three giant Wall Street custodians — Bank of New York Mellon Corp., JPMorgan Chase & Co. and Northern Trust Corp. — are working on crypto-custody services or exploring it, people briefed on their efforts said.

Goldman Sachs has so far been taking baby steps around cryptocurrencies and hasn't yet set up a full-fledged desk to trade the currencies since hiring Justin Schmidt earlier this year as head of its digital-asset markets.

It was among the first Wall Street firms to clear Bitcoin futures offered by Cboe Global Markets Inc. and CME Group Inc.

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