© Reuters. The FTX company logo is displayed in front of a falling stock chart. “Coins” or coins representing cryptocurrencies are in the foreground. /Illustration taken on November 10, 2022/REUTERS/Dado Ruvic
by Iain Withers and Lawrence White
PARIS (Reuters) – Goldman Sachs (NYSE:) plans to spend millions of dollars buying or investing in cryptocurrency-related businesses after the resounding bankruptcy of FTX sent industry valuations plummeting and scared away some investors .
The fall of FTX has highlighted the need for greater transparency and regulation in the cryptocurrency industry, and major institutions like Goldman Sachs see it as an opportunity to grow in the sector, its head said. of digital assets, Mathew McDermott, to Reuters.
Goldman Sachs has opened “due diligence” processes – which include a set of checks before a possible acquisition – on a number of cryptocurrency companies, he added, without providing further details.
“We’re seeing some really good opportunities, at much more reasonable prices,” said Mathew McDermott.
FTX filed for US bankruptcy protection last month after massive customer withdrawals and a failed bailout attempt by rival Binance. Its fall sparked a crisis of confidence in the industry and calls for increased regulation.
“It definitely weighed on market sentiment, there’s absolutely no doubt about that,” said Mathew McDermott. “FTX was a star player in many parts of the ecosystem.”
“But to repeat myself, the underlying technology continues to perform well.”
Banks competing with Goldman Sachs, however, are more skeptical about the outlook for the sector.
“I don’t think it’s an end of fashion or a disappearance, but I can’t attribute [au secteur, ndlr] an intrinsic value,” said the boss of Morgan Stanley (NYSE:), James Gorman, at the Dec. 1 Reuters NEXT event.
For his part, HSBC (LON:) chief Noel Quinn indicated last week at a banking conference in London that he does not plan to expand into cryptocurrency trading or invest for clients of the retail bank.
TRADING VOLUMES INFLATED
Goldman Sachs, on the other hand, does not hide its interest.
At the very time of FTX’s fall, bank executive David Solomon told CNBC that he sees opportunities in the technology underlying cryptocurrencies as its infrastructure formalizes.
The division headed by Mathew McDermott employs more than 70 people, seven of whom work in cryptocurrency options and derivatives trading.
Goldman Sachs has already invested in 11 digital asset companies that provide services such as compliance, cryptocurrency data and blockchain management.
The fallout from the FTX collapse has inflated Goldman Sachs’ trading volumes, Mathew McDermott said, as investors seek to trade with regulated and well-capitalized counterparties.
“What has increased is the number of financial institutions that want to trade with us,” he said. “I suspect a number of them previously worked with FTX but I can’t say that with absolute certainty.”
Goldman Sachs also sees hiring opportunities in cryptocurrencies and the tech industry, which is currently experiencing a wave of layoffs.
(Report Iain Withers and Lawrence White, Blandine Hénault for the French version, edited by Kate Entringer)