(Bloomberg) – Goldman Sachs Group Inc. is about to offer investment vehicles for Bitcoin and other digital assets to clients of its private wealth management unit.
“We’re working closely with teams across the company to explore ways to provide thoughtful and appropriate access to the ecosystem for private wealth clients, and that is something we expect to see in the near future,” said Mary Rich, who recently announced the Global player was appointed head of the unit’s digital assets, said in an interview with CNBC.
Wall Street banks have largely stayed away from cryptocurrencies. Although Bitcoin is now over 11 years old, there are very few things it can actually buy and volatility is a huge risk. Three years ago, Goldman hired a crypto trader to run the digital asset markets with the aim of introducing cryptocurrency to both the company’s employees and customers, but the company got the idea of Bitcoin as an asset class in recently downplayed.
Bitcoin’s rally in recent months has fascinated wealthy investors in new ways. During the cryptocurrency surge in 2017, they largely stayed on the sidelines. Many compared the cryptocurrency to tulip mania. Warren Buffett called Bitcoin a “mirage” and Jamie Dimon, chief executive officer of JPMorgan Chase & Co., said it was a “scam” (although he later regretted the comment).
This time they come on board along with a wide range of private investors. Data compiled by JPMorgan showed that retail investors bought over 187,000 bitcoins this quarter through mid-March, compared to about 205,000 last quarter. Institutions bought roughly 173,000 of the world’s largest cryptocurrency during this period, up from nearly 307,000 in the last three months of 2020.
And big banks are spreading the idea that customers could use Bitcoin to diversify their portfolios. JPMorgan strategists recently touted cryptocurrency as a way to hedge against significant swings in traditional asset classes. And the Bank of New York Mellon Corp. BNY Mellon has announced plans to hold, transfer and spend the digital currency for their customers.
READ ALSO: Wall Street Stays On Crypto Sidelines As Tesla Boosts Bitcoin
In a memo to employees on Wednesday announcing Rich’s appointment, Goldman said that Rich “will leverage the company’s capabilities to ensure we can best serve client interests across digital asset classes and technologies,” it said . “As a company, we believe in the possibility of blockchain technologies, and it is imperative that we keep going.”
Goldman plans to begin offering digital asset investments in the second quarter and is considering eventually offering a “full spectrum” of such investments, “whether through physical bitcoin, derivatives or traditional investment vehicles,” Rich told CNBC.
(Adds details on mainstream Bitcoin adoption starting with the fourth paragraph.)
–With support from Sridhar Natarajan and Charlie Wells.