What Do Lloyd Blankfein and Goldman Sachs Want From Bitcoin?
Lloyd Blankfein, CEO of Goldman Sachs — the investment bank once infamously labeled a “Vampire Squid” — has commented on recent reports of his company entering the cryptocurrency space via Twitter. But what are he, and his company, really up to?
Will Goldman Sachs Offer Bitcoin Trading to Clients?
The Wall Street Journal had reported Goldman Sachs was considering offering a bitcoin trading service for its clients, making them the first major Wall St. investment firm to do so. Blankfein’s tweet confirmed that story:
Still thinking about #Bitcoin. No conclusion – not endorsing/rejecting. Know that folks also were skeptical when paper money displaced gold.
— Lloyd Blankfein (@lloydblankfein) October 3, 2017
Blankfein’s comments follow other positive statements over the past week by IMF head Christine Lagarde and BlackRock CEO Larry Fink.
However, compared to recent hyperbolic statements from others in the financial field, such as Jordan Belfort and Jamie Dimon, Blankfein’s comments are relatively sober and thoughtful. Already, Twitter has responded in the best way it knows how: memes.
While Goldman Sachs may be the biggest firm to date to express an interest in Bitcoin and crypto, as Zerohedge tweeted, they are part of a groundswell of involvement.
At least 70 hedge funds now invest in cryptocurrencies, according to Autonomous NEXT
— zerohedge (@zerohedge) October 3, 2017
Some point out the fact that just having Goldman Sachs considering bitcoin highlights the changing sentiment towards the cryptocurrency space, something that can likely be attributed to the massive run-up in price that has attracted global attention.
When non-believers become believers it looks something like this : https://t.co/yti0bwnfgw
— BTCVIX (@BTCVIX) October 3, 2017
The timing of Blankfein’s tweet has some Wall St. veterans applauding Goldman’s shrewd strategy. While other banks were dismissive of bitcoin, Goldman remained largely quiet, until now. Giving further weight, Blankfein has only tweeted 18 times since 2011 — and has now mentioned Bitcoin on the back of dismissive statements by rival bank JPMorgan.
— Caitlin Long (@CaitlinLong_) October 3, 2017
Others extrapolate further, seeing any potential Goldman Sachs bitcoin service as a move to capture a sector of the market. If cryptocurrency, led by bitcoin, becomes an established, global asset class, then somebody will become the leading firm in the industry.
— Kazonomics (@kazonomics) October 3, 2017
But not everyone views Goldman through that prism. After all it’s a firm, like JPMorgan, with a reputation for devious business practices and influential relationships with senior members of the U.S. government. From this it landed the nickname “Vampire Squid” in 2010 — “wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”.
While the influx of the fabled “institutional money” would be welcomed by holders and businesses, not everyone sees it as a positive:
It's not for rentier c****. Go away. https://t.co/BnH9Okisr7
— Max Keiser (@maxkeiser) October 4, 2017
Are Goldman Sachs, Wall Street Banks Tainted?
That being said, any comment Blankfein makes regarding cryptocurrency is sure to court controversy due to the sentiment surrounding banking and the practices of Wall St. As frequently noted, Bitcoin was created as a response to the profligacies of a financial sector renowned for fraud and unethical behavior.
It is not hard to find examples of the practices which feed this sentiment. The 2015 film “The Big Short” highlighted some of the worst examples, where Goldman Sachs continued selling toxic MBSs to clients, even as it was offloading its own holdings, knowing they were essentially worthless.
Then, in the aftermath of the crisis, it emerged that in order to qualify for TARP payments from the U.S. government, Goldman Sachs acquired a tiny commercial bank with extremely flimsy justification. Without the acquisition it would likely not have qualified.
Since those taxpayer funded bailouts of 2008 that saved about-to-be bankrupted Wall St. investment firms (like Goldman), the investment banking sector has consolidated and benefitted enormously from the U.S. Federal Reserve’s experimental Q.E. program.
— Steve Burns (@SJosephBurns) October 3, 2017
But what cannot be denied is this: having eminent financial institutions of the day even considering trading bitcoin is a huge event in the cryptocurrency’s history.
If the move is strategic, as has been postulated, then it will catapult the market caps of BTC and other cryptocurrencies exponentially higher, pushing them to become the global asset class that so many have theorized about over the years.
What do you think Goldman’s plans are for bitcoin? Let’s hear your thoughts.
Images via TheStreet, Smithsonianmag.com