David Solomon, the CEO of the American multinational investment bank and financial services company, has strongly denied that the bank which he has been CEO of since October 2018, ever had plans to establish a cryptocurrency trading desk.
Solomon refuted the crypto trading plans in comments made to the United States House of Representatives Financial Services Committee earlier this week. The Goldman Sachs CEO attended a hearing called “Holding Megabanks Accountable: A Review of Global Systemically Important Banks 10 years after the Financial Crisis.”
The denial by Solomon contradicts a number of rumours and unconfirmed reports that Goldman Sachs, one of the world’s largest financial institutions, was to set up a cryptocurrency trading desk. Talk first emerged in a Bloomberg article back in December 2017, when cryptocurrencies were trading at their peaks. The plan was originally set for Summer 2018. However, in September 2018, unnamed sources told Business Insider that the crypto trading project had been put on hold. Just a few days after the crypto trading on hold leak, Martin Chavez, the Goldman Sachs Chief Financial Officer, called the reports “Fake News.”
Lloyd Blankfein, the previous CEO of Goldman Sachs before Solomons, maintained an open-minded but still cautious approach to the whole cryptocurrency world. Blankfein was previously on record saying:
“[Bitcoin] is not for me. But there is a lot of things that there weren’t for me in the past that have worked out very well. If it was 20 years forward and it worked out, I could tell you why it worked out. But based on everything that I know, I am not guessing that it will work out.”
Solomons did say in his remarks to the Senate Hearing that Goldman Sachs was involved with clients clearing physically-settled crypto futures. However, the CEO did state that the alleged trading plans were not true.
“The first [Bloomberg article] wasn’t correct. Like others, we are watching and […] doing work to try to understand the cryptocurrency market as it develops […] but we never had plans to open a cryptocurrency trading desk.”
Solomons went on to say:
“We might at some point in time, but there’s no question, when you’re dealing with cryptocurrency, it’s a new area […] it is unclear from a regulatory perspective, it’s unclear whether […] in the long run, as a currency, those technologies are going to work and be viable.”
Crypto Trading Uncertainty
The US has been unsure of how to handle the crypto trading from a regulatory point of view. There has been some debate at the highest levels of whether Altcoins like Bitcoin (BTC) are assets or currencies. Whilst the reduced volatility seen in the crypto world in 2018, made the long term viability of cryptos more realisable. Traders began finding technical analysis could be applied to crypto trading, just like forex technical analysis.
One encouraging sign was that the Ohio Republican Congressman Warren Davidson, who was doing the questioning of the Goldman Sach CEO over the media reports, himself shared his belief that the U.S. is lagging behind other countries and not succeeding to “take advantage of this thriving sector [crypto]” due to regulatory uncertainty.
Meanwhile, other CEOs in the hearing attendance including JPMorgan Chase CEO Jamie Dimon, all affirmed the value of blockchain technology. However Dimon reiterated his view that decentralized cryptocurrencies don’t have any intrinsic value.
Better Crypto Future?
WIth one of the world’s biggest investment institutions giving their imprimatur to Bitcoin and other digital currencies, it looks increasingly likely that other banks and Wall Street institutions will follow suit. It seems that along with the opening of futures trading on CME and CBOE, this latest news could well further legitimize cryptocurrencies.
