Goldman Sachs Offers First Bitcoin-Backed Loan
2022.04.29 17:16
Goldman Sachs Offers First Bitcoin-Backed Loan
Goldman Sachs has made history in the crypto world. This time, the Wall Street bank issued its first-ever Bitcoin-backed loan, thus contributing even more to its strategy of crypto adoption.
The loan was made to an undisclosed borrower in cash but collateralized in the world’s leading cryptocurrency – Bitcoin.
The asset holder will be able to borrow fiat currency, such as dollars or euros, after putting their Bitcoin as collateral – an item of value that a lender can seize from a borrower if they fail to repay a loan regarding the agreed terms.
According to Bloomberg, the loan comes with 24-hour risk management, meaning that it’s carefully watched at all times. The volatility of Bitcoin puts the loan in the risky category. If the price of Bitcoin starts to dip, leading to incurring losses, the borrower may be requested to add more collateral to support the risk of getting their assets liquidated.
That is not the first time that Goldman took an innovative approach to experimenting with digital assets. Last month, the investment bank made its first over-the-counter Bitcoin trade with tech firm Galaxy Digital, making a historical mark for Wall Street banks.
However, the bank offers access to crypto ETFs (Exchange Trader Funds) and options trade rather than spot crypto trading. Institutional traders usually prefer to invest in cryptocurrencies through an intermediate, as opposed to holding tokens themselves.
On The Flipside
- Earlier this week, Goldman announced that it was exploring the tokenization of physical assets in order to enter the NFT business.
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