Goldman Sachs is getting serious about cryptocurrencies.
According to news reports, the venerable Wall Street firm has hired Justin Schmidt, whose LinkedIn profile cryptically announces his affiliation to “Crypto” in the last year, to head its Digital Assets division. Schmidt earlier worked as a senior vice president with Seven Eight Capital, a quantitative trading strategies firm based in New York, and as a portfolio manager with LMR Partners, a UK-based hedge fund. He has Bachelors and Masters degrees from the Massachusetts Institute of Technology.
Schmidt’s Hire is a Major Step Foward for Goldman Sachs
In a statement to online publication Tearsheet, which first reported the news, Goldman Sachs spokesperson Tiffany Galvin said that the firm was “exploring how best” to serve clients in the space. “At this point, we have not reached a conclusion on the scope of our digital asset offering,” she stated. (See also: Goldman To Set Up Crypto Desk By June 2018).
Schmidt’s hire is a major step forward in Goldman Sachs’ ambitions in cryptocurrencies and is the clearest indications of its intent regarding the investment class. In the past year, the firm has mostly alternated between being enthusiastic and critical of cryptocurrencies. For example, Goldman CEO Lloyd Blankfein has refused to dismiss cryptocurrencies and publicly cogitated about their potential. But his bank’s team has released notes stating that cryptocurrencies will need to clear “several regulatory hurdles” before becoming a viable medium of exchange. Recent statements by current and former regulatory chiefs have signaled impending regulation for cryptocurrencies. (See also: ICO Tokens Are Securities, Says Former CFTC Chief).
To be sure, Goldman already has a hand in the cryptocurrency pie. It acts as a clearing agent for bitcoin futures at Cboe and CME. It is also an investor in Circle, a financial services app that uses blockchain, the underlying technology for cryptocurrencies, to accomplish cheap transfers. It is also rumored to be starting a starting a trading desk for cryptocurrencies in June. But Goldman has denied the rumors. Some online publications have opined that Schmidt’s hire may change things.
Investing in cryptocurrencies and Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns 0.01 bitcoin.
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