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Goldman Sachs finance head dubs crypto reports 'fake news'

Already this year Bitcoin has shed more than half of its value.

Custody is an issue for the regulators

Goldman Sachs has dismissed reports about its cryptocurrency dealing plans as ‘fake news’.

Earlier this week a report in Business Insider said the US bank had dropped plans to set up a cryptocurrency trading desk.

Martin Chavez, Goldman’s chief financial officer, said there was never anything definite about its crypto plans.

“When we talked about exploring digital assets we said that it was going to be exploration that would be evolving over time. 

" I never thought I would hear myself use this term but I really have to describe that news as fake news," he told the TechCrunch Disrupt Conference in San Francisco.

Chavez did confirm the Goldman was working on a bitcoin derivative for its clients.

This would be an over-the-counter future settled in dollars with the reference point bitcoin versus the US currency on a number of exchanges.

Goldman Sachs has been clearing bitcoin-linked futures contracts offered by the Chicago futures exchanges since May.

Prices slide 

Chavez added there has to be a safe custody solution before the bank can think about Bitcoin trading,

Goldman is said to be working on custody services, where it will hold crypto assets securely for large clients wanting to invest in Bitcoin, Ethereum and other currencies.

How to ensure cryptos are safe from hacking attacks is one of the issues regulators are trying to get their heads around.

Bitcoin and a number of other leading crypto currencies tumbled on the Business Insider story, though recovered a little today.

Already this year Bitcoin has shed half of its value.

Volumes too low for giants

James Mawhinney, managing director of investment boutique Mayfair 101, said the volumes of trading currently in cryptos are too small for a giant such as Goldman.

“For heavyweights like Goldmans to be investing so heavily in this there needs to be the volumes to support it.” 

He expects crypto prices to recover over the next 3-6 months as stronger, more compelling blockchain implementations and investment opportunities start to come online.

The key will be mass adoption, he says.

“No one cryptocurrency, including Bitcoin, has made substantial moves towards being mass-adopted. 

“This is one of the biggest opportunities Mayfair 101 sees - the release of a mainstream digital currency.“

Mawhinney is chairman of MYNT (monetise your data), a project establishing an asset-backed cryptocurrency that is looking to raise US$500mln.

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