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Crypto investments: Goldman Sachs’ next destination

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According to Mathew McDermott, the fallout from FTX's bankruptcy increased Goldman Sachs' trading volume

After the FTX collapse hit crypto valuations and reduced investor interest, Goldman Sachs plans to spend tens of millions of dollars to purchase or invest in cryptocurrency businesses.

Goldman Sachs digital assets’ head Mathew McDermott said that the Sam Bankman-Fried-headed exchange’s collapse has increased the demand for more dependable, regulated crypto players.

He also said that big banks were seeing it as a business opportunity.

“Goldman Sachs is conducting due diligence on a number of other crypto businesses,” Mathew McDermott added.

“We do see some really interesting opportunities, priced much more sensibly,” he remarked.

After its sudden collapse on November 19, 2022, FTX filed for Chapter 11 bankruptcy protection in the United States, raising concerns about contagion and escalating calls for stronger regulation of the crypto industry.

“It’s definitely set the market back in terms of sentiment, there’s absolutely no doubt of that,” Mathew McDermott said, adding that, “FTX was a poster child in many parts of the ecosystem. But to reiterate, the underlying technology continues to perform.”

Even while Goldman Sachs’ possible investment is modest compared to the Wall Street giant’s USD 21.6 billion revenue last year, its willingness to keep investing amid the sector shakeout shows it senses a long-term opportunity.

According to the data website CoinMarketCap, the crypto market peaked at USD 2.9 trillion in late 2021, but has since lost around USD 2 trillion due to credit tightening by central banks and a wave of high-profile corporate failures. On December 5, it was valued at USD 865 billion.

According to Mathew McDermott, the fallout from FTX’s bankruptcy increased Goldman Sachs’ trading volume as investors sought to transact with regulated and well-capitalized counterparties.

“What’s increased is the number of financial institutions wanting to trade with us. I suspect a number of them traded with FTX, but I can’t say that with cast iron certainty,” Mathew McDermott said.

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