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Despite the booming interest in Bitcoin ETFs led by BlackRock and Fidelity, Goldman Sachs' Sharmin Mossavar-Rahmani expressed the firm's continued skepticism towards cryptocurrency as a viable investment, contrasting with the broader Wall Street trend.
Goldman Sachs Cautious on Crypto: A Firm Stance Amidst Bitcoin ETF Hype
In an interview with the Wall Street Journal (via Yahoo Finance), Sharmin Mossavar-Rahmani, chief investment officer at Goldman Sachs Wealth Management, stated that despite the recent hype surrounding Bitcoin ETFs, her firm is not investing in them.
"We're not believers in crypto," she said. "We do not think it is an investment asset class."
"If you cannot assign a value, how can you be bullish or bearish?" she added. According to the Journal, the difficulty of valuing cryptocurrencies, which do not produce earnings, dividends, or cash flow, is at the heart of her disdain.
Having guided thousands of wealth advisors, clients, and traders over the past 23 years in her role at the high-profile investment bank, she told the newspaper that clients are aware of the company's anti-crypto stance and avoid seeking counsel for investing in the space, despite Bitcoin reaching an all-time high of $73,737 last month, according to CoinGecko.
Mossavar-Rahmani believes cryptocurrency is a speculative investment and does not see value in unregulated markets: "The rule of law and systems of checks and balances matter."
However, Mossavar-Rahmani's stance contrasts with those of others in traditional finance, who gradually incorporate cryptocurrency into their offerings. It contradicts rumors that Goldman Sachs may be more crypto-friendly behind the scenes.
"Though Goldman Sachs might not have a developed view of Bitcoin or digital assets as long-term investments in portfolios, they are certainly engaging with the ecosystem from an infrastructure perspective," said Matt Ballensweig, BitGo's Go Network, the bank's digital asset research unit, is managed by its managing director and head.
Mathew McDermott, the bank's global head of digital assets, told Reuters in December that he expects a "significant uptick" in blockchain-based asset trading volume within the next year or two and increased client interest in crypto derivatives trading.
"Regardless of view, large banks are going to have to service their client needs, and we're seeing that unfold now," Ballensweig said.
BlackRock and Fidelity Spearhead the Rapid Growth of Bitcoin ETFs on Wall Street
Since the Securities and Exchange Commission approved 11 spot Bitcoin exchange-traded funds in January, two of them have been issued by well-known Wall Street asset managers: BlackRock's iShares Bitcoin Trust (IBIT) and Fidelity's Wise Origin Bitcoin Fund (FBTC).
Given their access to mainstream investors and established customer bases, both funds are leading the fiercely competitive Bitcoin ETF race, with nearly $60 billion in assets under management as of Monday, according to BitMEX data. IBIT and FBTC have accumulated over $17 billion and $10 billion, respectively, becoming the fastest ETF in history to achieve this milestone.
Furthermore, while Mossavar-Rahmani may publicly oppose investing in cryptocurrency, CoinDesk reportedin January that Goldman Sachs was in talks to become an authorized participant (AP) for Grayscale and BlackRock ETFs. This role entails creating and redeeming ETF shares to ensure the products trade in close alignment with their underlying assets.
Wall Street's Elite and Exchanges Rally Behind Bitcoin ETFs, Eyeing Major Expansion
According to SEC filings, Jane Street and JPMorgan are among the quantitative high-speed traders on BlackRock's AP roster. Another filing shows that Valkyrie, a fellow ETF issuer, has partnered with Jane Street and Cantor Fitzgerald to fill AP roles.
Meanwhile, according to notices on their websites, the Nasdaq, CBOE, and NYSE Arca, all filed 19b-4s with the SEC to allow the trading of related options. Furthermore, CoinDesk reported in February that investment bank Morgan Stanley is allegedly considering adding spot Bitcoin ETFs to its brokerage platform.
According to sources familiar with the situation, the Wall Street behemoth is conducting due diligence on the products. If approved, Morgan Stanley would be the first large registered investment advisor (RIA) network and broker-dealer platform to list the ETFs, potentially paving the way for Merrill Lynch and Wells Fargo to increase inflows significantly.
"These networks and platforms are the addressable market for Bitcoin that the ETFs were always supposed to open up. We know of other big wire houses or advisor platforms that have approved some of these ETFs for trading already," Bloomberg analyst James Seyffart said. "I think eventually the vast majority of platforms, if not all, will approve these things," he added.
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