Ryan Van Wagenen of Global Private Equity has become an expert in cryptocurrency over the years through GPEs investments in products tied to the blockchain. Van Wagenen expounds on the recent focus of big banks into cryptocurrency. Most big banks in New York and other states in America have attempted to stay away from Bitcoin. However, one of the most storied names in finance is Goldman Sachs. He is bucking all the risks. He moves ahead with different plans and sets up the very initial bitcoin trading operation at a Wall Street Bank.
In a step that will lend legitimacy to virtual currencies, the bank will start using its own money to trade with clients in a wide range of contracts associated to the price of the mother of currency – bitcoin.
Even though Goldman will not be purchasing or even selling actual Bitcoins, its team still considers taking that direction when the members figure out how to effectively deal with the risks linked with holding the virtual currency.
Rana Yared, a part of the Goldman directors supervising the construction and development of the trading operation, said that the entire bank was mindful of its decision. “Goldman Sacs was clear-eyed about what it was getting itself into,” she added.
Ms. Yared also said that she would not define herself as a true advocate who wakes up believing that the cryptocurrency would take over the globe. For every individual involved, there has been particular uncertainty brought to the table.
Still, the suggestion of one of the most vaunted banks on Wall Street would consider trading bitcoin preposterous a few years back. It is the time when the cryptocurrency was known as a tool to purchase drugs over the internet.
Ryan Van Wagenen points out that the mother of all cryptocurrencies was created in 2009 by Satoshi Nakamoto. Everyone gets curious about Satoshi because he or she is still an anonymous figure. Nobody knows the identity of this person yet. He or she talked about replacing the banks on Wall Street and not give them a new line of revenues.
Over the past few years, some large investors and hedge funds in different parts of the world have expressed an eager interest in virtual currencies. There are also tech companies that have started proposing Bitcoin services to all of their services, and one of those is Square.
Aside from that, the majority of commodity exchanges in Chicago begun allowing their clients to trade bitcoin commodities contracts in the later part of 2018. Who would have ever thought that many organizations would take advantage of the cryptocurrency? Despite the risks, bitcoin still has countless benefits, making it worth considering.
Nevertheless, regulated financial institutions were clear to shut down customer’s accounts after they traded bitcoins. Chief executive of JP Morgan Chase Jamie Dimon called the cryptocurrency a fraud. Plus, other bank chief executives said that bitcoin is a theoretical bubble.
Ms. Yared said that Goldman Sachs had come up to the thought that bitcoin isn’t a scheme. The entire company also believed it does not have all the features of a particular currency. It is a valuable commodity like gold according to its clients as long as the limited quantity of bitcoin can be mined in a virtual as well as complex system.
She said it is resonating when a customer says, “I want to hold bitcoin futures because I believe it is an alternative source of value.”
Ms. Yared said Goldman Sachs received lots of inquiries from endowments, hedge funds, and foundations that received donations from the new-minted bitcoin millionaires and are unable to handle them. The decision to start trading these contracts went thru the board of directors.
Ryan Van Wagenen notes that Goldman’s step comes with skepticism. The cryptocurrency’s prices set on unregulated exchanges in other parts of the globe where a few measures are available to avoid manipulation in the market.
Since in the first quarter of the year, there was significant recovery and an increase in the price of Bitcoin although most traders have faced cynicism about how the regulatory agencies will deal with this virtual currency.
Goldman Sachs has been doing more than the other banks on Wall Street. Along with what it does is clearing trades for different customers who want to purchase and sell bitcoin futures on the Chicago Board Options Exchange and the Chicago Mercantile Exchange.
In the coming weeks, Goldman will start utilizing its own money to trade Bitcoin future contracts for its clients. It will likewise create a more flexible version of a future, called as non-deliverable forward, for its customers.
Justin Schmidt, a digital asset trader, joined the bank two weeks ago to supervise its operations in bitcoin futures trading desk. Before working in Goldman, Mr. Schmidt was an electronic trader at Seven Eight Capital. He left his job to trade with his virtual currencies in 2017.
Ms. Yared said he would be placed on the foreign currency desk of the bank because bitcoin trading is similar to the movements in the growing market in digital currencies. Mr. Schmidt is looking at trading physical bitcoin when the bank secures approval from New York authorities as well as Federal Reserve.
Other Institutions that interact with Bitcoin and other Crypto
- Chicago Board Options Exchange
The Chicago Board Options Exchange (CBOE) is the first US-based exchange for providing bitcoin Futures. Its services are based on the bitcoin price on the Gemini virtual exchange.
- Chicago Mercantile Exchange
CBOE was followed by the Chicago Mercantile Exchange. CME is the second exchange for providing bitcoin trading since December 2017.
- Nasdaq Stock Market
The Nasdaq Stock Market does not yet offer a trade in this cryptocurrency. But it has plans to launch a bitcoin futures contract this year. So it will be the third exchange operator to deliver bitcoin contracts throughout America.
- New York Stock Exchange
This organization is also planning to engage in the crypto industry. In fact, it asked the Exchange Commission as well as the US Securities for consent to list two bitcoin futures on its targeted market.
Despite the risks in bitcoin, many organizations have expressed interest to the cryptocurrency. Other banks such as JP Morgan Chase, Bank of America Merrill Lynch, Citi, Deutsche Bank and UBS have all expressed interest and shared views on the sector. Along with them are the Chicago Board Options, the Chicago Mercantile Exchange, and Goldman Sachs Exchange as well. The cryptocurrency has a great future to expect.
About Ryan Van Wagenen
Mr. Van Wagenen is from Cottonwood Heights and has been in the private equity industry for a decade. He started at Global Private Equity on the team focused on diligence, and has now moved to an executive role within the firm. As a Director, Ryan Van Wagenen leads the execution of the firms technology related deals. In recent years, the firm has transitioned to cutting edge investments related to Bitcoin, Ethereum, and other cryptocurrency