Goldman Extends Its Crypto Tentacles in Answer to Wall Street FOMO

Welcome to Bloomberg Crypto, our twice-weekly look at Bitcoin, blockchain and more. If someone forwarded this to you, sign up here. In today’s edition, Yueqi Yang unpacks big banks’ crypto ambitions:

Wall Street crypto FOMO

Wall Street and crypto haven’t had the closest of relationships. Bitcoin came about as a direct reaction to the power and excesses of the banking system that led to the 2008 global financial crisis. Big banks long saw crypto as a fringe world prone to wild swings

That’s all changing as crypto matures from its early days, evolving into an almost $2 trillion market with platforms sustaining a host of new tokens as well as gaming, NFTs and — significantly — finance. In response, big banks and finance firms are warming up to crypto.  

This week brought two notable developments on this front. Goldman Sachs announced its first over-the-counter crypto options trade, augmenting existing efforts involving digital-asset derivatives. Boutique bank Cowen an even bigger step, offering spot trading of 16 coins, from Bitcoin and Ether to Solana and Uniswap. 

Here’s what the home page of Goldman’s website looked like this week as it heralded its crypto news:

Already, firms such as Bank of America have set up crypto research arms; others, like JPMorgan Chase, are making tentative steps in crypto futures trading. Meanwhile, crypto exchanges COINBASE and FTX, which gained their prowess from dealing with retail investors, are pushing into the institutional space, poaching Wall Street executives along the way. 

Goldman’s crypto expansion means the start of “coopertition” — a mix of cooperation and competition — between traditional finance and crypto-native firms, said Damien Vanderwilt, co-president of Galaxy Digital, the digital-asset financial services firm that facilitated Goldman’s crypto options trade.

While banks are beefing up their digital-asset teams, executives (the latest from Citigroup Jefferies) are heading out the door for crypto ventures. David Richardson, a partner at search firm Heidrick & Struggles, says that when Wall Street clients call him to make crypto hires, the first thing he advises is to look internally.

“The chances are if you are a big financial services firm, there are a whole group of people internally that are doing this stuff now as a hobby, and would jump at the opportunity to turn a hobby into a career,” Richardson said. Maybe Wall Street’s answer to FOMO lies under its own roof. And let the coopertition begin.

Charting it out

Hearing them out

The founder of the blockchain that powers the UST stablecoin discusses a plan to use Bitcoin reserves to back the tokens

“UST is going to be the first internet native currency that implements the Bitcoin standard as part of its monetary policy."

Co-founder of the Terra blockchain

What we’re reading (and writing)

• Free Crypto Money Giveaways Return With Many of Same Old Risks
• Everyone Has Crypto FOMO, But Does It Belong in Your Portfolio? (New York Times) 
• Margins of Up to 90% Give Energy Firms That Mine Bitcoin an Edge
• An Appalachian Town Was Told a Bitcoin Mine Would Bring a Boom. It Brought Pollution and an Eyesore (Washington Post)
• Crypto-Focused SPAC Companies Are Outperforming Their Peers
• Exxon Is Powering Crypto Mining With Excess Gas to Avoid Flaring
• Will Russians Use Cryptocurrency to Bust Sanctions?: Editorial (Bloomberg Opinion)

Thank you for reading. We welcome all feedback at [email protected]

Follow us on Twitter at . To access cryptocurrency data and news on the Bloomberg Terminal, type 

— With assistance by Vildana Hajric