Goldman Sachs, a prominent Wall Street bank expressed that there is doubt surrounding the potential of cryptocurrency as it is not viewed as a viable investment category.
According to an interview with the Wall Street Journal, Sharmin Mossavar-Rahmani, the Chief Investment Officer of the bank's Wealth Management unit, further reinforced this perspective by stating that Goldman Sachs does not support investing in cryptocurrencies.
Sharmin then further stated that they're not believers in crypto, and think it's not an investment asset class.
If you cannot assign a value, then how can you be bullish or bearish?
Sharmin Mossavar-Rahmani
While other traditional finance competitors are venturing into the crypto industry to meet their clients' demands, this stance remains unchanged for Goldman Sachs.
In her 23-year tenure at a prestigious investment bank, she has advised numerous wealth advisors, clients, and traders. Despite Bitcoin's recent surge to an all-time high of $73,737, clients are aware of the firm's anti-crypto position, resulting in a reluctance to seek guidance on cryptocurrency investments.
Mossavar-Rahmani views crypto as primarily speculative and emphasizes the importance of regulated markets and legal frameworks: "The rule of law and systems of checks and balances matter."
However, her perspective contrasts with the gradual integration of cryptocurrency by some in traditional finance. Moreover, rumors suggesting Goldman Sachs could adopt a more crypto-friendly stance run counter to Mossavar-Rahmani's stance.
Challenges in Evaluation and Criticisms in the Market
According to Mossavar-Rahmani, the challenge lies in determining the true worth of cryptocurrencies, which is a major reason for Goldman Sachs' caution. The absence of a clear-cut valuation for these assets is the main reason why the bank is hesitant to view them as viable investment tools.
Furthermore, she criticized the cryptocurrency sector for the discrepancy between its proclaimed goal of promoting financial inclusivity and the reality of being governed by a select few individuals.
Responses to competition in the world of crypto
While Goldman Sachs maintains a conservative approach, other prominent financial institutions are actively incorporating blockchain and cryptocurrency into their offerings.
One example is the J.P. Morgan Chase blockchain platform, which launched in 2020 and currently employs over 100 individuals. Similarly, Citigroup Inc. is currently exploring the possibility of tokenizing private funds, indicating a potential trend of leveraging blockchain technology for traditional financial products.
The stance of Goldman Sachs on cryptocurrency has set it apart from other major banks, as it has not fully embraced the use of digital assets or blockchain technologies.
However, with the evolving landscape and increasing customer interest in cryptocurrencies, the bank has chosen to take a cautious approach and prioritize considerations such as valuation and governance in its decision-making process.
Damilola is passionate about cryptocurrencies and has a background in content writing and journalism. In his free time, he enjoys reading and staying updated on new developments in the blockchain industry. He is also interested in studying the potential impact of Web3 and blockchain technology on the future economy.
About Goldman Sachs
Goldman Sachs stands as a premier global investment banking and securities company, offering a comprehensive suite of investment, advisory, and financing solutions to a diverse clientele spanning corporations, financial institutions, governments, and affluent individuals worldwide.
Established in 1869, it holds the distinction of being one of the most ancient and largest investment banking entities globally. With its headquarters situated in New York, Goldman Sachs operates offices in key financial hubs like London, Frankfurt, Tokyo, Hong Kong, and other major centers across the globe.
Amidst the tumultuous banking crisis of 2007-08, Goldman Sachs (GS) stood out among financial institutions, weathering the storm with notable resilience. The subprime mortgage debacle presented a double-edged sword for the Wall Street giant, yielding extraordinary profits while subjecting it to substantial short-term credit from the Federal Reserve.
Transformed into both a net borrower and a symbol of the darker aspects of high finance, Goldman Sachs epitomized the complexities of the financial landscape. Today, it reigns over an industry characterized by fewer yet more formidable investment management and banking entities, each adept at generating immense profits.