In a big step forward for institutional cryptocurrency acceptance on Wall Street, Goldman Sachs has offered its first Bitcoin-backed loan.
For the first time in Goldman Sachs’ history, a spokeswoman told Bloomberg that the multinational investment bank had lent cash collateralized by Bitcoin owned by the borrower. She went on to say that the offer was particularly appealing due to its structure and round-the-clock risk management.
Last month, Goldman Sachs, which now has its own digital assets team, completed its first over-the-counter crypto transaction in partnership with Galaxy Digital, Michael Novogratz’s crypto investment firm.
Goldman Sachs isn’t alone in its venture into digital assets; other Wall Street firms are also stepping up their efforts in the cryptocurrency space.
BlackRock, a multibillion-dollar asset management company, announced the creation of a blockchain-focused exchange-traded fund on Wednesday (ETF). The company also announced a $400 million investment round and a partnership with Circle, the main operator of the USD Coin (USDC) stablecoin, earlier this month.
While overcollateralized crypto-backed loans have long been a staple in the field of DeFi, the crypto-collateralized loan is quickly becoming a viable choice for institutions and governments seeking more funding.
Propy, a blockchain real estate platform, launched a partnership with Abra yesterday to provide its customers with home loans secured by bitcoin holdings. On Wednesday, a new homeowner in Austin, Texas, purchased an apartment through the USDC.homes website. The deposit was made in crypto, and the mortgage was undercollateralized and relied solely on the applicants’ credit scores.
El Salvador is now seeking funds for its volcano bond, a Bitcoin-backed government bond that will be used to raise $1 billion in cash for the building of Bitcoin City and to expand the country’s BTC holdings.