Cryptocurrencies were up this week as credible news emerged regarding cryptocurrency investment from a major bank.
On Wednesday, the New York Times reported that Goldman Sachs, one of the most respected firms on Wall Street, is moving ahead with plans to launch a cryptocurrency trading desk. The bank is responding to demand for cryptocurrencies from hedge funds and endowments.
Other banks are following suit.
Another major bank, Morgan Stanley, already provides clients with the option of trading bitcoin futures and is also rumored to be setting up its own cryptocurrency trading operation.
Mainstream banks might begin accepting bitcoin, and will start offering storage and software access.
Up until now, banks have been hesitant to get involved in cryptocurrency, as government regulations remain unclear. But that seems to be changing, as well.
On Tuesday, the Wall Street Journal reported that regulators from the U.S. Securities and Exchange Commission (SEC) and the Commodities and Futures Trading Commission (CFTC) will meet next week to discuss the ground rules for regulating cryptocurrency.
And while some fear government regulation of cryptocurrency could limit its growth, the opposite could be true.
Since banks are required to follow stringent government regulations, Goldman’s advance into cryptocurrency indicates a belief that regulators will develop a reasonable approach to regulating the market.
It also signals to clients and other banks that Goldman believes in the legitimacy of digital currency.
Following the news, the price of bitcoin briefly topped $9,700, closing in on the psychologically important $10,000 mark.
Conclusion
Goldman Sachs confirmed this week its intention to develop business in the growing digital currency space.
The news represents the latest positive signal that institutional investors are considering cryptocurrency as an investable asset class.
Other banks and clients will follow Goldman’s lead, resulting in higher prices for top cryptocurrencies.