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Goldman Sachs Offers First Bitcoin-Backed Loan

Goldman Sachs has made history in the crypto world. This time, the Wall Street bank has issued its first ever Bitcoin-backed loan, thus contributing even more to its strategy of crypto adoption.

The loan was made to an undisclosed borrower in cash, but collateralized in the world’s leading cryptocurrency–bitcoin.

The asset holder will be able to borrow fiat currency, such as dollars or euros, after putting their bitcoin up as collateral–an item of value that a lender can seize from a borrower should they fail to repay a loan in the agreed terms.

According to Bloomberg, the loan comes with 24-hour risk management, meaning that it’s carefully watched at all times. The volatility of Bitcoin puts the loan in the ‘risky’ category. If the price of Bitcoin starts to dip, leading to incurring losses, the borrower may be requested to add more collateral to lessen the risk of getting their assets liquidated.

This is not the first time that Goldman Sachs has taken an innovative approach to experimenting with digital assets. Last month, the investment bank made its first over-the-counter Bitcoin trade with tech firm ‘Galaxy Digital’, marking a historical moment for Wall Street banks.

However, the bank offers access to crypto ETFs (Exchange Trader Funds) and options trading, rather than spot crypto trading. Institutional traders usually prefer to invest in cryptocurrencies through an intermediary, as opposed to holding tokens themselves.

On the Flipside

  • Earlier this week, Goldman announced that it was exploring the tokenization of physical assets in order to enter the NFT business. 

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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