CEO of Goldman Sachs, David Solomon, has clarified why the financial giant has not fully embraced Bitcoin despite growing global interest in cryptocurrencies. Speaking recently in a CNBC interview, David pointed to regulatory restrictions as the main reason for its limited involvement in the Bitcoin market.
He explained that current regulations prevent Goldman Sachs from directly holding Bitcoin, trading it, or participating in market-making activities, where the bank would facilitate trades for clients.
“At the moment, from a regulatory perspective, we can’t own, we can’t principal, we can’t be involved with Bitcoin at all,” he explained.
In the United States, regulatory challenges surrounding Bitcoin stem from its unique nature, which doesn’t fit neatly into existing legal and financial frameworks. Bitcoin operates as both a digital asset and a potential currency, leading to differing interpretations by various government agencies.
For instance, the SEC treats certain cryptocurrencies as securities, while the CFTC classifies Bitcoin as a commodity. This lack of uniformity creates uncertainty for businesses and individuals dealing with Bitcoin.
Concerns about fraud, money laundering, and illicit activities have prompted regulators to impose strict compliance requirements, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) rules. These measures, while aimed at ensuring transparency and security, often increase the cost and complexity of adopting Bitcoin in mainstream financial institutions.
US remains king
David also noted that despite the popularity of Bitcoin, he does not see Bitcoin as a direct competitor to the U.S. dollar, stressing that the dollar remains central to the global financial system and international trade.
The U.S. dollar is widely used globally, serving as the dominant reserve currency and a key medium of exchange in international trade. Approximately 60% of global foreign exchange reserves are held in U.S. dollars, according to data from the International Monetary Fund (IMF).
In addition, the U.S. dollar is involved in nearly 88% of all foreign exchange transactions, as of 2023, based on figures from the Bank for International Settlements (BIS).
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While Goldman Sachs cannot engage directly with Bitcoin, it has found ways to be involved indirectly. The bank invests in Bitcoin-related funds such as BlackRock’s iShares Bitcoin Trust and products managed by Grayscale, Fidelity, and other leading asset managers. These investments allow Goldman Sachs to gain exposure to cryptocurrency markets without violating regulatory rules.
New crypto venture
Goldman Sachs is also in the process of spinning out its cryptocurrency platform into a standalone company. This initiative is being spearheaded by Mathew McDermott, the firm’s global head of digital assets.
The new entity will focus on creating and trading blockchain-based financial instruments and will include partnerships with other platforms, such as Tradeweb Markets, to expand its offerings.
The spinout is expected to be completed within the next 12 to 18 months, pending regulatory approvals. According to Goldman Sachs, establishing a separate company will enhance the potential for innovation and expansion in digital financial services.
This decision aligns with the broader growth of blockchain technology and the increasing adoption of crypto-related products in institutional finance.
