Who Buys Semi-Bankrupt Crypto Firms
2022.12.06 02:03
Who Buys Semi-Bankrupt Crypto Firms
Budrigannews.com – Goldman Sachs (NYSE:) plans to invest tens of millions of dollars in crypto companies after the FTX exchange’s collapse lowered valuations and stifled investor interest.
Mathew McDermott, head of digital assets at Goldman Sachs, told Reuters that the implosion of FTX has increased the need for more reputable, regulated cryptocurrency players, and that big banks see an opportunity to expand their operations.
Goldman is doing a reasonable level of effort on various different crypto firms, he added, without giving subtleties.
McDermott stated in an interview last month, “We do see some really interesting opportunities, priced much more sensibly.”
After its dramatic collapse on November 11, FTX filed for Chapter 11 bankruptcy protection in the United States, raising concerns of contagion and intensifying calls for increased crypto regulation.
According to McDermott, “It’s definitely set the market back in terms of sentiment, there’s absolutely no doubt about that.” In numerous ecosystem components, FTX served as the model. However, as previously stated, the fundamental technology continues to function.”
Goldman, a Wall Street giant that made $21.6 billion last year, may not invest a lot, but its willingness to keep investing despite the sector shakeout indicates that it sees a long-term opportunity.
On November 10, as the FTX drama was unfolding, its CEO David Solomon stated to CNBC that although he regards cryptocurrencies as “highly speculative,” he sees a lot of potential in the underlying technology as its infrastructure becomes more formalized.
Morgan Stanley (NYSE:) stated, “I don’t think it’s a fad or going away, but I can’t put an intrinsic value on it.” On December 1, CEO James Gorman stated at the Reuters NEXT conference.
In contrast, HSBC CEO Noel Quinn stated at a banking conference in London last week that he does not intend to expand into crypto trading or retail investing.
11 digital asset companies that offer services like compliance, cryptocurrency data management, and blockchain management have received investments from Goldman Sachs.
In his spare time, McDermott participates in triathlons. He joined Goldman in 2005 and rose through the ranks to lead the company’s digital assets division after serving as head of cross asset financing.
His team now has more than 70 members, including a crypto options and derivatives trading desk with seven employees.
Goldman Sachs, MSCI, and Coin Metrics have also launched the data service datonomy, which aims to classify digital assets according to how they are used.
McDermott stated that the company is also developing its own private distributed ledger technology.
“TRUSTED” Players According to data site CoinMarketCap, the global cryptocurrency market reached its peak of $2.9 trillion at the end of 2021. However, this year, the market has lost approximately $2 trillion as a result of central banks tightening credit and a series of high-profile corporate failures. On December 5, it was last at $865 billion.
McDermott stated that Goldman’s trading volumes have increased as investors have sought to trade with regulated and well-capitalized counterparties as a result of the FTX collapse’s ripple effects.
He stated, “The number of financial institutions who want to trade with us has increased.” Although I can’t say for sure, I suspect that some of them traded with FTX.”
McDermott stated that although the bank is content with the size of its team for the time being, Goldman also sees opportunities for recruitment as tech and crypto companies shed staff.
Additionally, others see the crypto crisis as an opportunity to expand their businesses.
Mark Bruce, the CEO of Britannia Financial Group, disclosed to Reuters that the company is developing cryptocurrency-related services.
Bruce stated that the London-based business intends to serve customers who are eager to diversify into digital currencies but have never done so. It will also appeal to investors who are well-versed in the assets but are wary of storing funds on crypto exchanges due to FTX’s demise.
“We have seen more client interest since the demise of FTX,” he stated, “and Britannia is applying for more licenses to provide crypto services, such as doing deals for wealthy individuals.” Customers are looking for more dependable counterparties as a result of their loss of faith in some of the younger businesses in the sector that focus solely on crypto.”
