Goldman Sachs is among a handful of tier-one US banks figuring out how to use bitcoin as collateral for cash loans to institutions, according to three people familiar with the plans.
Banks such as Goldman will not touch cryptocurrency spot markets but lean towards synthetic crypto products such as futures. Emulating tri-party repo type arrangements, banks are exploring ways to follow the same path of not touching bitcoin, like other synthetic products.
It’s an opportunity that lays the groundwork for more integrated crypto prime brokerage services in the future, according to the sources CoinDesk spoke with. It’s also a continuation of Wall Street’s relatively sudden embrace of a $2.7 trillion asset class – albeit with somewhat niche products.
“Goldman was working on getting approved for lending against collateral and tri-party repo,” said one of the people. “And if they had a liquidation agent, then they were just doing secured lending without ever having bitcoin touch their balance sheet.”
Goldman Sachs declined to comment.
Goldman is not alone; a handful of big banks are following the trail blazed by crypto-friendly banks Silvergate and Signature, both of which announced bitcoin-backed cash loans earlier this year.
“We’ve probably spoken to half a dozen big banks about [bitcoin-backed loans],” said a second person from a large institutional trading firm. “Some of them are in the next three to six months category and some are further out. What’s interesting is some of these banks will use their own balance sheet to make the loan. Others will syndicate this out.”