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Goldman Sachs plans to invest tens of millions of dollars in digital asset businesses following the failure of the FTX exchange. Mathew McDermott, head of digital assets at Goldman disclosed that the collapse of FTX has increased the demand for more dependable, regulated cryptocurrency players, and big banks see an opportunity to take up business.
He went on without adding any further information, saying, "Goldman is conducting due diligence on a number of other crypto businesses."
McDermott stated, "We certainly see some really exciting opportunities, priced much more sensibly."
As a result of the abrupt collapse of FTX on Nov. 11, concerns about contagion were raised and calls for stronger regulation of the cryptocurrency industry grew. In McDermott's view, the market's attitude has been negatively affected by it. "FTX was the ecosystem's poster child in many areas. But once more, the fundamental technology
According to David Solomon, CEO of Goldman Sachs, the underlying technology has a lot of potentials as its infrastructure becomes more structured.
It is clear from Goldman's desire to continue spending that it sees a long-term opportunity, even if its investment is modest compared to its $21.6 billion revenue last year.
Solomon earlier disclosed that crypto assets are extremely speculative, but if institutionalization is made more efficient, they could generate a lot of value.
Morgan Stanley CEO James Gorman stated, "I don't think it's a fad or going away, but I can't put an intrinsic value on it," on December 1 at the Reuters NEXT conference. For HSBC’s CEO Noel Quinn, the bank has no plans to expand into retail crypto trading or investing
McDermott, a triathlete in his free time, joined the elite investment bank in 2005 and quickly advanced to lead the division of its digital assets after leading cross-asset financing. The Goldman Sachs Group has invested in 11 digital asset businesses that offer services such as compliance, bitcoin data, and blockchain administration.
Over 70 people are now part of his team, including seven traders on a cryptocurrency derivatives and options desk.
A data service autonomy initiative has also been established by Goldman Sachs, MSCI, and Coin Metrics to categorize digital assets based on their intended use. Moreover, McDermott said that the company is developing its own proprietary technology for distributed ledgers.