Goldman Sachs to accept Bitcoin as loan collateral

Goldman Sachs to accept Bitcoin as loan collateral

BUSINESS| Dec 03, 2021 | WOZINGA NEWS

Goldman Sachs to accept Bitcoin as loan collateral

  • Goldman Sachs and other banks want to use bitcoin as loan collateral without touching it.

By Elah Mae Ariate Wozinga Staff

Goldman Sachs is one of a few top-tier U.S. banks experimenting with using bitcoin as collateral for cash loans to institutions.

Goldman Sachs want to use bitcoin as loan collateral without touching it

Banks such as Goldman Sachs will avoid cryptocurrency spot markets in favor of synthetic crypto products such as futures.

Replicating tri-party repo arrangements (a way of borrowing funds by selling securities with an agreement to repurchase them, involving a third-party agent).

Banks are looking for ways to avoid dealing with bitcoin in the same manner that they have avoided dealing with other phony items.

One of the people added, “Goldman was working on getting approved for lending against collateral and tri-party repo.” “And if they had a liquidation agent, they were merely performing secured lending with no bitcoin on their balance sheet.”

Banking bitcoin

Goldman is not alone. In fact, several large banks are following in the footsteps of crypto-friendly banks Silver gate and also Signature. Both unveiled bitcoin-backed cash loans earlier this year.

“We’ve probably talked to a half-dozen big banks about bitcoin-backed loans.” A second source from a prominent institutional trading firm said, according to Coindesk. “Some of them are within the next three to six months, while others are further off.” What’s remarkable is that some of these institutions will make the loan using their own balance sheet.

In addition during the previous administration. The idea of banks accepting bitcoin as collateral was from a partial green light. It was when Office of the Comptroller of the Currency (OCC) chief Brian Brooks. He stated that bitcoin was the equivalent of cash and that banks could be the safe keepers of it.

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