Goldman Sachs, the famous US investment bank, has just launched its first loan secured in Bitcoin (BTC). Coinbase is the first company to take out this loan. Thanks to its large cryptocurrency reserve, the platform was able to obtain fiat currency to fund its projects without having to sell any of its bitcoins.
Coinbase takes out Goldman Sachs’ first Bitcoin-backed loan (BTC)
Coinbase, one of the largest cryptocurrency exchange platforms, reveals that it has taken out a Bitcoin (BTC) loan from Goldman Sachs bank. As reported by Bloomberg on May 3, 2022, this is the first loan secured by a cryptocurrency offered by the bank.
Interviewed by the media, Brett Tejpaul, head of Coinbase Institutional, the division dedicated to institutional investors, explains that the loan is “a first step in the recognition of cryptocurrency as collateral”. The deal is intended to “solidify the bridge between the fiat and crypto economies,” the executive said.
As a reminder, Goldman Sachs revealed that it made a Bitcoin loan to a company on 28 April 2022. The investment bank did not disclose the identity of the borrower. When asked by CoinDesk, Goldman Sachs explained that it had made a loan of fiat currencies secured by a pool of Bitcoin. It said the Bitcoin stockpile is “held by the borrower. “
Loans secured by cryptocurrencies are on the rise
Concretely, Coinbase was able to secure a dollar loan using its cryptocurrency holdings. The US exchange holds 4,487 bitcoins, or approximately $170 million at the time of writing.
Lending fiat currencies backed by a pool of bitcoins is not new. Silvergate Bank, a fintech and cryptocurrency bank, already launched US dollar loans backed by a digital currency pool last year. MicroStrategy took out a loan with Silvergate Bank to expand its Bitcoin pool.
Anchorage, a digital asset bank, is offering loans backed by Ether (ETH) to its institutional clients with BankProv, the 10th oldest bank in the US.
Cryptocurrency-backed loans allow companies to release fiat money to fund projects without having to sell back any of their collateralised assets. The cryptocurrencies deposited as collateral are simply stored on a wallet.
Wall Street turns to Bitcoin and cryptocurrencies
Goldman Sachs was among the first banks to venture into the world of crypto-assets. Aware that crypto-currencies are a new asset class, the American bank has multiplied its investments in the sector.
In 2021, it even relaunched its cryptocurrency trading service after three years of closure. Recently, we also learned that Goldman Sachs is considering a partnership with FTX to strengthen its presence in the crypto-currency market.
Goldman Sachs is not the only Wall Street giant to turn to cryptocurrencies. A few days ago, BlackRock, the world’s largest asset manager, launched an exchange-traded fund (ETF) focused on companies in the crypto-blockchain industry.
