CRYPTO MOVERS AND PRICES
Crypto was broadly down this morning. Activity in the cryptocurrency Reddit forum has fallen to levels previously seen in early July.
Crypto Story of the Day
Goldman Sachs has participated in a USD 41 million raise by crypto fund manager One River Digital Asset Management. We review the bank’s involvement in crypto to date.
One River Digital was founded in 2020 as a subsidiary of One River Asset Management. The startup, initially backed by Alan Howard via a seed round, raised USD 41 million from news investors, including Goldman Sachs, which acquired a minority stake in the firm. The Series A funding round valued Greenwich, Connecticut-based One River Digital at USD 186 million. One River Digital currently manages 3 funds: one that holds BTC, another that holds ETH, and a recently-launched third fund that holds Solana (SOL).
Former SEC Chairman Jay Clayton recently joined One River Digital’s advisory board. In 2015, Goldman Sachs participated in Circle’s USD 50 million raise. Tom Jessop, then serving as Managing Director of Goldman Sachs’ Principal Strategic Investments Group, described Circle as representing a “compelling opportunity in the digital payments space.”
Tom Jessop became President of Fidelity Digital Asset in 2018. Also in 2018, Goldman Sachs announced a new effort that involved the firm trading available BTC derivatives on behalf of its clients. Months later, however, reports emerged that Goldman Sachs was discontinuing plans to launch a BTC trading desk. The bank neither confirmed nor denied the reports and responded to CNBC that “In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering…”
Last year, Mathew McDermott, a Managing Director who ran the investment bank’s internal funding operations, became the firm’s new Global Head of Digital Assets. CNBC reported that McDermott, based out of London, is expanding his team by its headcount in Asia and Europe. At the time, McDermott also said the bank was interested in “the commercial viability of creating our own fiat digital token,” but added that “it’s early days.”
In May, a Goldman Sachs internal memo revealed that a new cryptocurrency trading team and desk had been formed. The bank’s crypto team was announced to exist with the global currencies and emerging markets trading division, reporting to Goldman partner Rajesh Venkataramani. CNBC reported in June that Goldman Sachs had begun trading BTC futures with Galaxy Digital.
Goldman Sachs’ continued, and seemingly growing, involvement in the crypto space is reflective of the embrace BTC has seen from some institutions in 2021. Having said that, in hindsight the firm may have never truly abandoned its attempts to launch BTC trading services. The length of time that it took for Goldman Sachs to begin trading BTC products— about 3 years— highlights the difficulty for institutional actors to participate in the space.
Furthermore, Goldman Sachs’ reliance on Galaxy Digital to facilitate its trading services also highlights that crypto native firms will continue to facilitate the participation of traditional financial institutions in the space.