Goldman Sachs Offers Its First-Ever Bitcoin Backed Lending Facility

Goldman Sachs Offers Its First-Ever Bitcoin Backed Lending Facility

According to a recent report, Goldman Sachs recently offered its first-ever BTC-backed lending facility. This facility allows investors to access fiat loans by collateralizing their BTC stash. According to reports, this move comes as Wall Street continues to warm up to crypto assets. 

Goldman Sachs Bitcoin Backed Loan

Yesterday, Yuegi Yang, a Bloomberg Reporter, tweeted that Goldman Sach will start offering Bitcoin-backed loans. Goldman Sachs is a  global investment banking network offering security and investment management while providing a vast collection of financial tools to investors. 

Goldman Sachs is introducing its first lending facility with bitcoin backing. The Tweet by Yuegi Yang says,

“Goldman Sachs offered its first-ever lending facility backed by Bitcoin, a significant step in Wall Street’s embrace of cryptocurrencies. The deal was interesting to Goldman because of its structure and 24-hour risk management.” 

This facility allows investors to receive fiat loans like USD by staking their crypto as collateral. There are no further details about this upcoming bitcoin-backed loan facility.

Financial Institutions Warming up to Crypto 

This move by Goldman Sachs proves that many top fiat banks are already warming up to crypto. Goldman Sachs was never positive about crypto up until just a year ago. Initially, Goldman Sachs had a crypto trading platform but closed it and even wildly criticized bitcoin. In 2020, for instance, Goldman Sachs said bitcoin is not an asset class. 

However, recently the financial institution has been very bullish on crypto, anticipating a $100k price tag for the coin. Goldman Sachs has published several bitcoin articles, mostly around the price. It also recently filed applications for a BTC ETF. Goldman Sachs has other crypto-related products like OTC Bitcoin options and is planning the same with Ethereum

The Goldman Sach entrance into the BTC-backed loans business is good for the crypto industry, especially regarding legitimacy, liquidity, and optionality. But, this is not entirely the first time a BTC-backed loan has worked in the crypto space. There have been cases of crypto projects accessing fiat loans using their crypto stash as collateral. 

Argo, for instance, a mining company announced in June 2021 that they acquired a $20 million loan using their BTC stash as collateral. Argo accessed this BTC-backed loan from Galaxy Digital financial institution. Argo crypto mining firm used the fiat loan to pay for their operating expenses. 

Other banks like Morgan Stanley, Jefferies Financial Group, and BlackRock have also made huge investments in crypto. Wallstreet and banking institutions are already embracing the digital class of assets. They are creating opportunities that will help expose customers to crypto. 

How It Benefits Individuals

BTC investors have been buying more coins during the dips to increase their holdings in the past. Many investors are bullish on BTC and, as such, are not ready to sell them. After watching BTC’s history of price appreciations, many investors expect such to continue in the future. 

This loan feature by Goldman Sachs will help investors to keep holding their BTC but still access fiat to complete daily purchases. For instance, instead of a BTC holder selling their coin to buy a house, they can use it as collateral to get fiat loans. You keep your bitcoin and have no worries about tax implications on BTC sales.

Wayne Jones

Wayne is an all-rounded cryptocurrency writer who has written for several publications in the fintech industry. Having graduated from the University of Essex Colchester, he developed a passion for blockchain technology and has been curious about how the blockchain can modify the traditional financial industry.