Last year will be known for a myriad of events. While the institutionalization of crypto might not make it to the top of the list, it was among the biggest trends in financial services. The news that Goldman Sachs is entering the crypto custody market helps to push that trend even further.
The crypto markets in general have long been dominated by retail investors, even today retail accounts for 91 percent of crypto asset investments according to Singapore-based SC Ventures. Institutions have been quickly catching up, even the likes of JPMorgan Chase and Goldman Sachs have changed their tune.
Goldman Sachs has held multiple public positions on crypto over the years, it wasn’t that long ago they were rumored to be creating a crypto trading desk. The news from earlier this week is the clearest indication yet that the bank will be getting more involved in the space as they are rumored to reveal their plans soon.
According to reports Goldman Sachs issued a request for information (RFI) to explore digital asset custody, as part of a broader digital strategy.
Goldman is not the only large scale bank getting involved in the crypto custody business. CoinDesk reported in early December that Northern Trust and Standard Chartered’s fintech investment unit, SC Ventures, were launching Zodia Custody in the UK. JPMorgan Chase and Citi are also said to have expressed interest in the custody space.
The larger trend is the more interesting one to watch. It begs the question: is the traditional financial system finally coming to the realization that crypto is here to stay? In short, yes. Though there are a lot of questions that still need to be answered before crypto is seen as an everyday part of our financial lives.
Regulation is still very near the top of the list. There is no global consensus on crypto regulation and a new administration in the U.S. will mean changes to current regulatory thinking. Banks like Goldman, JPMorgan, Northern Trust and others should push to lead the way. Their acceptance, holding and trading of the assets, will help to push regulatory bodies to a more innovative path.
It is hard to see the digital asset momentum being stopped but crafting a safe pathway into the global financial system will certainly help to ensure long term success.
Todd is the host of PitchIt: the fintech startups podcast, a weekly interview show featuring emerging fintech founders and leading venture capitalists. He is responsible for leading the content team which covers fintech through daily & weekly email newsletters, editorial, virtual events, and in-person conferences. He has been covering fintech, banking, and venture capital for more than 15 years, including speaking regularly at industry events.