Bitcoin, Goldman Sachs Record Loan to Coinbase: 27 Billion

There is always more financial technology In banking: Goldman Sachs issued Bitcoin secured loan Values 27 billion dollars To the “bag” of Cryptocurrency Coinbase Global. It was reported based on confidential sources Reuters. The loan structure causes this Goldman Sachs will not touch any crypto assets in the process, avoiding risks But the guarantee of interests. Provided that there are no objections from the organizer.

Banks Explore Cryptocurrency Lending

The first rule of thumb for banks that are exploring the potential of blockchain and cryptocurrency is Avoid placing any digital assets directly in the financial statements. The Basel Committee on Banking Supervision Last year he suggested a risk weight of 1,250% for a number of cryptocurrencies, including Bitcoin and Ether, which are extremely volatile meaning that any bank with a minimum capitalization of 8% could find themselves having to hold $1 of equity for all exposure. The dollar of cryptocurrency.

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So this is necessary for banks like Goldman Sachs Being able to offer crypto-asset loans without having to take out, What will happen, for example, if the debtor goes bankrupt. The trick already used by professional crypto lenders like Silvergate Capitalis the search A third party to retain warranties.

Saving bank trick

sporadic opinions explain How does the mechanism work. A crypto company, or investor, owns Bitcoin and wants to borrow dollars. They are aimed at a bank that can lend between 40% and 60% of the market capitalization of crypto assets. A third party acting as a trustee bank that holds the collateral. If the debtor goes bankrupt, he sells bitcoins for dollars and transfers them to the bank.

Silvergate used a company in the asset management group Fidelity Investments as the trustee bank. Goldman’s loan to Coinbase uses a similar third-party dependent structure.

Fintech and banks, regulator node must be resolved

Regulators can raise objections. If bitcoin prices fall, as they can, the custodian bank may struggle to sell large amounts of crypto assets and The lending bank is very vulnerable to exposure.

But, in this particular case, The Goldman Sachs process is solid Because Coinbase does not have a high risk profile and the loan is structured to offer Interest – according to confidential sources – about 6%-7% but with the benefit of the mortgage.

This is amazing Other investment banks, such as JPMorgan and Morgan Stanley, could be attracted to similar deals. The next step will be to offer cryptocurrency-based loans Directly to hedge funds and niche investors seeking to profit from large-scale pricing inefficiencies in the digital currency industry.

Like financial timesThe launch of the first Wall Street bitcoin futures trading platform (ProShares bitcoin Strategy Etf), linked to Cme futures, has created a huge gap between the price of bitcoin and its short-term futures contracts used by professional investors. It can bring in big profits. This is another area that is bound to create challenges for regulators.

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