Exclusive: Goldman Sachs on hunt for bargain crypto firms after FTX fiasco

LONDON, Dec 6 (Reuters) – Goldman Sachs ( GS.N ) plans to spend tens of millions of dollars buying or investing in crypto companies after the collapse of the FTX exchange hit valuations and dampened interest. the investor.

The rise of FTX has reinforced the need for more reliable, regulated cryptocurrency players, and big banks are seeing opportunities to take over the business, Mathew McDermott, Goldman’s head of digital assets, told Reuters.

Goldman is conducting due diligence on various crypto companies, he added, without giving details.

“We see a very interesting, more expensive opportunity,” McDermott said in an interview last month.

FTX filed for Chapter 11 bankruptcy protection in the US on November 11 after its collapse, sparking fears of contagion and intensifying calls for more crypto regulation.

“It’s certainly bringing the market back in terms of sentiment, there’s no doubt about it,” McDermott said. “FTX is the poster child in many parts of the ecosystem. But to reiterate, the underlying technology continues.”

Although Goldman’s potential investment is not huge for the Wall Street giant, which earned $21.6 billion last year, its willingness to continue investing during the sector’s shake-up shows that there is a long time.

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CEO David Solomon told CNBC on November 10, as the FTX drama unfolded, that while he considers the cryptocurrency to be “highly speculative,” he sees potential for it is the basic technology as the infrastructure becomes more formal.

Competitors are more skeptical.

“I don’t think it’s a fad or going away, but I can’t put any intrinsic value on it,” Morgan Stanley ( MS.N ) CEO James Gorman told the Reuters NEXT conference on Dec. 1.

Meanwhile, HSBC ( HSBA.L ) CEO Noel Quinn told a banking conference in London last week that he had no plans to expand into crypto trading or investing. he is a credit for retail customers.

Goldman has invested in 11 digital asset companies that provide services such as compliance, cryptocurrency data and blockchain management.

McDermott, who competes in triathlons in his spare time, joined Goldman in 2005 and rose to lead digital business after serving as the head of hedge funds. the property.

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His team has grown to over 70 people, including seven strong crypto options and derivatives trading desks.

Goldman Sachs has partnered with MSCI and Coin Metrics to launch a data service datonomy, aiming to classify digital assets based on how they are used.

The company is also building private ledger technology, McDermott said.


The global cryptocurrency market reached $2.9 trillion by the end of 2021, according to the website CoinMarketCap, but it dropped to about $2 trillion this year as lending intensified. -money of the central bank and the failure of famous companies. It last reached $865 billion on December 5.

The fallout from FTX’s collapse increased Goldman’s trading volume, McDermott said, as investors sought to sell to legitimate and sound counterparties.

“What has increased is the number of government institutions that want to sell to us,” he said. “I suspect many of them have traded on FTX, but I can’t say that with iron confidence.”

Goldman also sees hiring opportunities as crypto and tech companies shed staff, McDermott said, although the bank is happy with the size of its current team.

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Others see the crypto boom as an opportunity to build their businesses.

Britannia Financial Group is building cryptocurrency-related services, chief executive Mark Bruce told Reuters.

The London-based company aims to serve customers who want to diversify into digital currencies, but have never done so before, Bruce said. It will also satisfy investors who know the property well, but have become nervous about investing in crypto exchanges since the crash of FTX.

Britannia is applying for more licenses to provide crypto services, such as contracting for the wealthy, he said

“We’ve seen more customer interest since the demise of FTX,” he said. “Consumers are losing confidence in some of the younger companies in the sector that only do crypto, and are looking for more reliable partners.”

Reporting by Iain Withers and Lawrence White, Writing by Lananh Nguyen and Alexander Smith

Our Standards: The Thomson Reuters Trust Principles.


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