Goldman Sachs is seeing substantial demand for digital assets from its clients, but the banking giant is not sure how to meet that while still staying on the right side of regulation.
“Client demand is rising. We are regulated on what we can do. We continue to evaluate it and engage on it,” Reuters quoted John Waldron, president and COO of Goldman Sachs.
Speaking via webcast at the Wolfe Virtual FinTech Forum on Wednesday, Waldron added that US banks need to cope with regulations that bar them from trading physical cryptocurrencies.
He added that Goldman is in talks with regulators and the Federal Reserve about how they can custody digital assets and what are regulations governing their operation when dealing with virtual currencies.
A Goldman Sachs’ client survey on digital assets showed that 40% of wealthy customers surveyed by the bank currently have exposure to crypto. Further, 54% of respondents predict Bitcoin price will be between $40,000 and $100,000.
“The pandemic has been a significant accelerant. There is no question in our mind there will be more digital commerce and (use of) digital money,” Waldron added.
Even though crypto regulations in the US remain vague, the SEC has proposed a time-limited relief for crypto custodians operating as broker-dealers amid industry requests for clarity on whether they can hold such assets under federal securities laws.
The SEC proposed rules allow firms to safeguard digital assets under certain conditions. Specifically, for a period of five years, entities seeking to custody digital asset securities will not be subject to an enforcement action under the customer protection rule.
Explaining how the business will fit within existing federal laws, the SEC said a crypto custodian must take physical possession of “customers’ fully paid and excess margin digital asset securities.”
In addition, a crypto-focused broker-dealer should limit its business to digital asset securities and comply with the relevant securities laws.
Goldman Sachs officials confirmed plans reported last week that the bank has restarted its cryptocurrency trading desk. The investment bank started dealing in bitcoin futures and non-deliverable forwards beginning this week.
The move represents another significant milestone in the asset’s mainstream adoption, which already took a giant leap forward over the last three months.
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