[Newsflash] Goldman Sachs Crypto Custody Offering Will Utilize Bakkt Trading Platform
Plenty of rumors have been circulating about the initiatives that Goldman Sachs has been taking to establish a cryptocurrency product, considering their “hot and cold” attitude. The first alleged progress had to do with the potential to establish a trading desk that connects the Goldman Sachs clients and cryptocurrency. However, the trading desk became a custody services option that would allow clients to store Bitcoin.
At this point, Goldman Sachs has yet to officially confirm or deny what is happening with their possibility of a cryptocurrency venture. There’re no comments about what they are creating, discussing, or possibly launching, but there seems to be a reason for their decisions – Goldman has been aware all along of the institutional offerings that were coming their way. During this time, they’ve been examining the best option for supporting their digital asset offerings, and that seems to be Bakkt.
The decision to go through Bakkt was simple and easy to make. According to several sources, the winning feature of Bakkt was their infrastructure. According to Abacus Journal,
“All of the pipes, levers, and ‘factories’ that are being constructed to process billions of crypto trades per day will eventually all work together. Bakkt, Fidelity, Nasdaq, ErisX – all of them will eventually clear trades from a place like Goldman Sachs on a daily basis. These firms are just providing access and ‘regulatory insurance’ via custody and some warehousing services. Goldman choosing to work with Bakkt is a nice headline today but may be irrelevant by late 2019.”
It is clear that Goldman Sachs has faith in what Bakkt has built, which could also be due to the fact that it was developed as a project of ICE. However, rather than allowing Bakkt to be seen as a “new” product for the industry, Goldman believes that it is simply an extension of NYSE and other exchange brands that ICE created and supports. There’s a lack of risk involved with the platform, unlike that of exchanges unrelated to ICE, like Bitmex, Bitfinex, and others.
Goldman Sachs has taken it a step further, advising clients to stay away from exchanges like those listed above, due to regulatory and AML reasons. They’d rather clients stick with the “off-book” OTC crypto network, which spans the US, Asia, and Eastern Europe.
With Bakkt’s ecosystem, Goldman Sachs will be able to establish a narrative for the cryptocurrency industry that is significantly more stable and less risky for users. Still, this isn’t crisis point for Goldman Sachs or even Bakkt. Right now, Goldman is using the resources they have in Bakkt that is tried and true, trusting them more so than Fidelity. The whole arrangement centers around trust – trust in Bakkt’s process, trust in Sprecher and Loeffler, and trust that Bakkt will follow through with the standards that they’ve kept for years.