Goldman Sachs plans to splash “tens of millions of dollars” on investments or buyouts in crypto firms after the FTX collapse hit last month and suppressed investor interest.
The FTX collapse and subsequent contagion across major lending firms had elicited calls for more regulatory oversight on players, assuring big banks of the sector’s stability. In an interview with Reuters, Mathew McDermott, Goldman’s head of digital assets, revealed that the bank was conducting due diligence on several crypto firms noting that they saw an opportunity for businesses in the crypto sector to pick up.
“We do see some really interesting opportunities, priced much more sensibly,” McDermott said without giving details. According to the banker, despite the FTX debacle setting the crypto market back by far, they were focused on leveraging the sector’s underlying technology, which they project will explode in growth in a few years.
“It’s definitely set the market back in terms of sentiment. There’s absolutely no doubt of that. FTX was a poster child in many parts of the ecosystem. But to reiterate, the underlying technology continues to perform,” he added.
While this is not the first time that the $129.48B bank is showing interest in investing in the crypto sector, its particular timing of the bear market surprised many players who have expressed little to no plans on increasing their exposure to crypto-related investments.
Notably, according to McDermont, FTX’s collapse had been a blessing in disguise for the bank since its trading volumes had shot up as investors who sought to trade with regulated and well-capitalised counterparties were onboarded.
“What’s increased is the number of financial institutions wanting to trade with us. I suspect a number of them traded with FTX, but I can’t say that with cast iron certainty,” he went on.
In a November 10 interview, David Solomon, the bank’s Chief Executive Officer, said that although he viewed cryptocurrencies as “highly speculative”, he saw a lot of potential in the underlying technology as its infrastructure becomes more formalised.
So far, Goldman has a stake in 11 digital asset companies which provide services such as compliance, cryptocurrency data and blockchain management. On November 3, the bank partnered with MSCI and Coin Metrics to launch Datonomy, a new classification system for the digital assets market.
According to McDermott, the bank has also been building its own private distributed ledger technology as it seeks to capitalize on the potential of the blockchain to offer improved speed and transparency.