The U.S. House of Representatives Financial Services Committee hearing was quite an event – entitled “Holding Megabanks Accountable: A Review of Global Systemically Important Banks 10 Years After the Financial Crisis,” this meeting of the minds included the heads of many large U.S. banks, including J.P. Morgan’s Jamie Dimon and Goldman Sachs CEO David Solomon.
As these top brass answered questions from committee members including incoming freshman legislator Alexandra Ocasio-Cortez on a range of issues, from fair pay to mortgages, (see full video here), Solomon made an interesting statement about cryptocurrency that may have a bearing on future markets and how we see blockchain and crypto being treated in the U.S. corporate world.
Essentially, Solomon completely denied that Goldman Sachs had been in the process of opening a crypto trading desk, calling earlier Bloomberg reports from 2017 inaccurate.
“We never had plans to open a cryptocurrency trading des,” Solomon said while making the disclaimer that the company may at some point in time in the future take a look at cryptocurrency.
Solomon’s questioner Warren Davidson, a Republican congressman from Ohio, suggested that because of a lack of regulatory action, the U.S. may be falling behind in the global race to profit from these new technologies.
Going back to the Bloomberg reporting by Hugh Son, Dakin Campbell, and Sonali Basak in December 2017, we see that the report makes the rumor pretty concrete.
“Goldman Sachs Group Inc. is setting up a trading desk to make markets in digital currencies such as Bitcoin, according to people with knowledge of the strategy,” they wrote.
At least one of these reporters even made TV appearances to back up the news.
“Goldman is going forward,” Campbell told news anchors on Bloomberg TV. “They’re assembling a team – it’s serious.”
Questioned by an unnamed female anchor about why Bitcoin is going “bzzz” (staying flat after the news), Campbell suggested that the prior release of crypto futures had precluded some market response to Goldman Sachs decision.
Since then, it seems to be a very he said, she said process.
Cointelegraph writer Marie Huillet documents some back and forth about whether or not the project had been started, but then put away later in 2018.
“As previously reported, Goldman Sachs’ alleged plans to create a crypto-focused unit by the end of June 2018 were originally covered in a December 2017 report from Bloomberg,” Huillet wrote in a story that broke this morning. “In September 2018, unnamed sources told Business Insider that the project had been put on hold. Several days later, the firm’s chief financial officer, Martin Chavez, told reporters that the recent reports were ‘fake news.’”
Here’s what the New York Times had to say April 2:
“Goldman Sachs said it was opening a Bitcoin trading operation to serve clients. A year later, customer interest has been weak, and the bank has not received regulatory approval to buy and hold actual Bitcoins for customers, according to a person familiar with the operation, who was not authorized to comment on it publicly and spoke on the condition of anonymity.”
If ‘the smart money isn’t ready,’ or Goldman Sachs didn’t get regulatory approval, that’s something that could be reported – but to say that plans for a Bitcoin or crypto trading desk never existed might turn out to be a clever piece fiction. Stay tuned to see what shakes out as media figures and others continue to dig into the future intentions of Goldman Sachs and other U.S. banks in the cryptocurrency segment.