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Goldman Sachs to Open a Bitcoin Trading Operation (nytimes.com)

Posted by ryuzaki0 on from the times-they-are-changin' dept.

Even as most big banks have maintained distance from virtual currency Bitcoin, Goldman Sachs is bucking the risks: It plans to set up what appears to be the first Bitcoin trading operation at a Wall Street bank. From a report: In a step that is likely to lend legitimacy to virtual currencies -- and create new concerns for Goldman -- the bank is about to begin using its own money to trade with clients in a variety of contracts linked to the price of Bitcoin. While Goldman will not initially be buying and selling actual Bitcoins, a team at the bank is looking at going in that direction if it can get regulatory approval and figure out how to deal with the additional risks associated with holding the virtual currency. Rana Yared, one of the Goldman executives overseeing the creation of the trading operation, said the bank was cleareyed about what it was getting itself into. "I would not describe myself as a true believer who wakes up thinking Bitcoin will take over the world," Ms. Yared said. "For almost every person involved, there has been personal skepticism brought to the table."

31 of 50 comments (clear)

  1. Why am I not reassured. by AlanObject · · Score: 2

    First thought: here come the Bitcoin flash traders.

    1. Re:Why am I not reassured. by Mr0bvious · · Score: 1

      What ' transaction costs' are you referring to?

      A lot of trading platforms will let you do trades for 0.1% of the value - doesn't sound too prohibitive.

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      Never happened. True story.
    2. Re:Why am I not reassured. by ShanghaiBill · · Score: 1

      A lot of trading platforms will let you do trades for 0.1% of the value - doesn't sound too prohibitive.

      HFTs operate on razor thin net profits, often matching up buyers and sellers and making a tiny profit on the spread. A 0.1% transaction cost is going to squeeze most of them out of the market.

    3. Re:Why am I not reassured. by Joce640k · · Score: 1

      Goldman will not initially be buying and selling actual Bitcoins... a variety of contracts linked to the price of Bitcoin.

      So they'll only be selling futures or something, probably CFDs (a way of losing even more money than ordinary futures).

      --
      No sig today...
    4. Re:Why am I not reassured. by war4peace · · Score: 2

      Bitcoin Network and High Frequency Trading are mutually exclusive.
      You can engage in HFT only within one single exchange's ecosystem, because major crypto-exchanges have coin pools where wallets are referred rather than actually holding assets, but then you can only make a profit within that exchange, the overall market effect being limited because the exchanges are siloed.

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      ...gis sdrawkcab (usually not responding to ACs; don't bother posting as AC)
    5. Re:Why am I not reassured. by arglebargle_xiv · · Score: 2

      The vampire squid wrapped around the face of humanity has found a new opening that smells like money to relentlessly jam its blood funnel into?

    6. Re:Why am I not reassured. by Mr0bvious · · Score: 1

      Perhaps in typical markets, but 0.1% move in crypto happens many times every second.

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      Never happened. True story.
  2. Money Laundering by rsilvergun · · Score: 4, Interesting

    is what I'm guessing this will turn into. The question is how long can they get away with it. I know in Europe banking laws are written so you can't set up a banking structure that lets you launder money and pretend you didn't know that was happening. With the US it comes down to enforcement and regulatory oversight, both of which are lax right now.

    --
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    1. Re: Money Laundering by Anonymous Coward · · Score: 5, Insightful

      ITS Goldman Sachs you stupid or what?! They never needed BTC to make money laundering, they even cheated European Union to let them think Greece had money while they were bankrupt !!! (To let them join Europe when they should not have join Europe and euro group...) this is the bank who created the euro debt crisis! (Which was caused by the subprime America crisis, in which Goldman Sachs bet against his own clients...)

    2. Re: Money Laundering by DaMattster · · Score: 1

      History is about to repeat itself in a big way!

    3. Re: Money Laundering by phantomfive · · Score: 1

      Europe wanted to be cheated. They knew how bad Greece was, but unity seemed more important. California is doing the same thing about how much the high speed rail will cost, and Obamacare did also. Politicians lie because people want to be lied to. "It will be alright."

      --
      "First they came for the slanderers and i said nothing."
    4. Re:Money Laundering by TheZeitgeist · · Score: 2

      I know in Europe banking laws are written so you can't set up a banking structure that lets you launder money and pretend you didn't know that was happening.

      Ah, those wonderful Europeans and their financial cleanliness. Except for Switzerland. Oh, and don't forget Cyprus. Isle of Mann? That too I guess. Lichtenstein banks unsually well capitalized. Luxembourg doing alright I hear as well. I think Russia's entire 1% has their money stashed in London (not 'London' London...but the City of London). All above the board with no money laundering whatsoever pinky-swear.

    5. Re: Money Laundering by wwphx · · Score: 1

      Thank you for posting this, you got it in last night while I read Slashdot over breakfast. Too few know about what they did to/with Greece and the other evils that they have done. GS is a company that should have been reduced to cinders over the crash, but they would have simply reconstructed themselves under another name.

      --
      When you sympathize with stupidity, you start thinking like an idiot.
  3. Limited number of logical constructs by Beeftopia · · Score: 1

    There's only a limited number of these logical constructs. IMO they're (cryptos) are very similar to non-voting, non-dividend-paying shares of a company. Not much you can really do other than trade them (Google's class-c's are over a grand a piece now). There's the ledger to which all transactions propagate, like a secure Usenet. Kinda limits its use as a true currency when some rando on the left coast gets his ledger updated when I make a transaction on the other side of the country.

  4. Goldman Sachs... by Anonymous Coward · · Score: 1

    Aren't those guys supposed to be in jail for something?

    1. Re:Goldman Sachs... by ShanghaiBill · · Score: 2

      Aren't those guys supposed to be in jail for something?

      No. Goldman Sachs didn't need a bailout, and they didn't cause the crash. While everyone else was running up the housing market and pawning subprime mortgages off on Fannie Mae (backed by tax dollars), Goldman Sachs was betting against it, helping to deflate the bubble. If everyone had done what Goldman did, the financial crisis would have never happened.

    2. Re:Goldman Sachs... by OneSmartFellow · · Score: 1

      Well, almost right.

      They were also involved in selling sub-prime mortgage backed investment vehicles - in fact, theirs was named "The Worst" (it was also a tiny offering).

      So, yes, they made of profit on both sides of the game.   BUT, to be fair, they paid back all their TARP with interest.

      I hate Goldman Sucks as much as anyone - having worked there for a short period in the late 1990s - but, let's keep the facts straight.

    3. Re:Goldman Sachs... by ShanghaiBill · · Score: 1

      My recollection of the movie (which I highly recommend) is that GS lose big time.

      I don't think so. The big loser depicted in the movie was Morgan Stanley. Frontpoint, a subsidiary of MS, was shorting housing, but most of MS's bets were in the "wrong" direction. They lost big.

  5. Of course! by GerryGilmore · · Score: 4, Insightful

    If anyone can spot an opportunity to bilk marks out of their dollars while feathering their own nests (https://www.amazon.com/Where-Are-Customers-Yachts-Street/dp/0471770892), it would - yes! - be that "vampire squid" epitomized by GS.

  6. Oh boy by PopeRatzo · · Score: 4, Insightful

    Now that Goldman Sachs is involved, surely nothing can go wrong. They're reputation is impeccable.

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    You are welcome on my lawn.
    1. Re:Oh boy by fred911 · · Score: 1

      Yes, just what we need. Experienced, professional sharks trading in an unregulated market where they can make their own rules. Would you trust them?

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  7. Here we go again by DaMattster · · Score: 1

    This is really going to end well. How about Great Recession II, Even Worse?

  8. Fuck Goldman Sachs. by ruddk · · Score: 1

    See subject.

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    L'Idiot
  9. yeah right! by gravewax · · Score: 1

    Goldman Sachs would trade in dog turds if they thought it would make them money or they thought they could launder or cheat others with it. Them being involved adds precisely NOTHING to crypto coins legitimacy

  10. Gamble house take bets on a new game by Anonymous Coward · · Score: 1

    Is anyone surprised?

    GS opening a trading operation is no different than a gamble house taking bets on a new ball game. They can engineer it so they themselves take no position at all, i.e. they take a skim of the transactions regardless of who won/lost.

    This is no different than accepting bets on the result of a ball game, it is by no means endorsing the game itself, it only indicates there may be enough people interested in placing bets.

    HOWEVER, as the betting pool gets larger, there is always the problem of the gamblers trying to change the result of the game, legally or illegally, so they win. Very soon there will be market manipulation of whatever coins the bets are on, then you will see how the wolves from the Wall Street take all the money from the bit players.

  11. "likely to lend legitimacy" by Gonoff · · Score: 1

    Goldman Sachs or the big finance industry in general will do the very opposite of lending legitimacy. It is like suggesting that Russian oversight lends legitimacy to a democratic election...

    --
    I'll see your Constitution and raise you a Queen.
  12. How do you know a trend is over? by Opportunist · · Score: 1

    When mainstream media reports about it.

    How do you know a financial trend is over?

    When Goldman Sachs et al get involved in it.

    --
    We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
  13. Not the first and not trading BTC by jbmartin6 · · Score: 1

    Inaccurate headlines are fun! There are already at least a handful of large trading firms working in BTC and other cryptocurrencies, doing basic arbitrage among other things. This activity is necessary if the currencies are going to actually encroach on more traditional currencies, by providing market efficiency. I suppose one could argue that technically GS is the first "Wall Street bank", except they aren't trading BTC, they are offering futures contracts. Someone else will hold the BTC.

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    This posting is provided 'AS IS' without warranty of any kind, implied or otherwise.
  14. Confirmed... by yodleboy · · Score: 1

    It's now confirmed that Bitcoin is a scam...

  15. Hurray! by DontBeAMoran · · Score: 1

    Dogecoin to the moon*!

    * the moon equals 10 dollars.

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    #DeleteFacebook
  16. Now bitcoin is too big to fail by Khashishi · · Score: 2

    I mean, it's gonna fail anyways, but now we'll pay for it.