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Goldman Sachs Goes Crypto Bargain Hunting

2 mins
Updated by Geraint Price
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In Brief

  • Goldman Sachs said that it plans to buy or invest in crypto companies, in the wake of the FTX collapse.
  • According to Goldman’s head of digital assets, these companies can now be purchased at a discount.
  • Goldman has also seen its trading volumes swell since the collapse, as investors seek more trustworthy trading partners.
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Goldman Sachs plans on purchasing or investing in crypto companies at a discount following the collapse of crypto exchange FTX.

Goldman Sachs intends to spend tens of millions of dollars to this end, according to its head of digital assets. Managing Director Mathew McDermott said the investment bank is currently performing due diligence on an unspecified number of crypto firms. McDermott remarked that many of these “interesting opportunities,” have been significantly marked down as a consequence of the FTX collapse.

Goldman Sachs Crypto Moves

Following a run on its exchange, FTX filed for bankruptcy on Nov. 11. The size and integration of the firm shook the crypto industry and left many associated firms struggling in the wake of its collapse. 

Consequently, investors have been seeking out safer, more established ways of engaging with cryptocurrencies. McDermott acknowledged that Goldman’s trading volumes saw a boost following the collapse of the exchange. He suspects that several of them had been negatively affected by their experience with FTX. 

McDermott also acknowledged the increase in demand as another reason for Goldman making these investments in crypto companies. So far, Goldman has invested in 11 digital asset companies, with services ranging from compliance, and cryptocurrency data to blockchain management. 

McDermott’s team within digital assets includes a staff of over 70 and a seven-strong crypto options and derivatives trading desk. While McDermott said the company is content with the current size of its team, it also sees recruitment opportunities amidst the turmoil.

Interest from Investment Banks

Although crypto markets have fallen by two-thirds from their peak last year, these investments demonstrate Goldman’s belief in the sector. Recently, in partnership with MSCI and Coin Metrics, Goldman launched data service Datonomy to classify digital assets based on their use. McDermott also highlighted the development of proprietary distributed ledger technology

While investment banks have been critical of cryptocurrencies, they still acknowledge the potential of its underlying technology. Goldman Sachs CEO David Soloman said as much on CNBC last month, despite maintaining that cryptocurrencies are “highly speculative.” 

Meanwhile, JPMorgan has also created an entire division devoted to blockchain development dubbed “Onyx.” The investment bank made its first decentralized finance payment last month, in partnership with the Monetary Authority of Singapore.

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Nicholas Pongratz
Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage.
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