Goldman Sachs, the famous American investment bank, has just launched its first loan secured by Bitcoin (BTC). Coinbase is the first company to take out this loan. Thanks to its large cryptocurrency reserve, the platform was able to obtain fiat currency to fund its projects without having to sell any of its bitcoins.
Coinbase takes out Goldman Sachs’ first Bitcoin-backed loan (BTC)
Coinbase, one of the largest cryptocurrency exchange platforms, reveals that it has taken out a Bitcoin (BTC) loan from Goldman Sachs bank. As reported by Bloomberg this May 3, 2022, this is the first loan secured by a cryptocurrency offered by the bank.
Interviewed by the media, Brett Tejpaul, head of Coinbase Institutional, the division dedicated to institutional investors, explains that the loan is “a first step in recognizing cryptocurrency as collateral.” The deal struck aims to “solidify the bridge between the fiat and crypto economies,” the executive emphasizes.
As a reminder, Goldman Sachs revealed that it made a loan in Bitcoin to a company on April 28, 2022. The investment bank had not disclosed the identity of the borrower. When asked by CoinDesk, Goldman Sachs explained that it had made a loan of fiat currencies secured by a pool of Bitcoin. It specified that the Bitcoin stockpile is “owned by the borrower”.
Loans secured by cryptocurrencies are on the rise
Specifically, Coinbase was able to secure a dollar loan through its cryptocurrency holdings. The American exchange actually holds 4,487 bitcoins, or approximately $170 million at the time of writing.
Fiat currency loans backed by a supply of bitcoins are not new. Silvergate Bank, a fintech and cryptocurrency bank, already launched U.S. dollar loans backed by a digital currency stash last year. MicroStrategy actually took out a loan at Silvergate Bank to expand its Bitcoin stash.
Meanwhile, Anchorage, a digital asset bank, is offering loans backed by Ether (ETH) to its institutional clients with BankProv, the 10th oldest bank in the United States.
Cryptocurrency-backed loans allow companies to release fiat money to fund projects without having to sell back a portion of their collateralized assets. Cryptocurrencies deposited as collateral are simply stored on a wallet.
Wall Street turns to Bitcoin and cryptocurrencies
Goldman Sachs is among the first banks to venture into the world of crypto assets. Aware that crypto-currencies are a new asset class, the American bank has increased its investments in the sector.
In 2021, it even relaunched its cryptocurrency trading service after three years of closure. Recently, we also learned that Goldman Sachs is considering a partnership with FTX to strengthen its presence in the crypto-currency market.
Goldman Sachs is not the only Wall Street giant to turn to cryptocurrencies. A few days ago, BlackRock, the world’s largest asset manager, launched an exchange-traded fund (ETF) focused on companies in the crypto-blockchain industry.
