America’s financial services Goldman Sachs admitted that cryptocurrencies and the blockchain pose a significant business risk to the overall business strategy.
This follows the last week’s declaration by Bank of America, which stated that cryptocurrencies are a threat to its business model and faces a competition, compliance and technology adoption as a result of a massive crypto adoption.
Previously, Goldman Sachs CEO Lloyd Blankfein stated that one of the largest Investment banking groups does not have a bitcoin strategy, but a listing of cryptocurrencies as a business risk shows the level of change they bring to the traditional markets.
Goldman Sachs Annual 10-K filing
The investment giant made this disclosure in its annual 10-K filing with the US Securities Exchange Commission (SEC) dated 26th Feb. The filing clearly explains its risk exposures due to blockchain and cryptocurrencies investments. Goldman Sachs indirectly deals with these virtual currencies through cryptocurrency chained startups and facilitation of Bitcoin futures trading on its trading platforms. The annual 10-K filing states such involvement could harm the company if anything goes wrong with the technology.
The filing reads:
“We may be, or may become, exposed to risks related to distributed ledger technology through our facilitation of clients’ activities involving financial products linked to, distributed ledger technology, such as blockchain or cryptocurrencies, our investments in companies that seek to develop platforms based on distributed ledger technology, and the use of distributed ledger technology by third-party vendors, clients, counterparties, clearing houses and other financial intermediaries.”
The firm over the years has created its own crypto-portfolio involving startups dealing with the supply chain of cryptocurrencies, regardless of the firms CEO Blankfein’s sometimes negative comments towards the bitcoin and crypto world.
Goldman Sachs backed-Circle operates a crypto trading desk (Circle Desk) and recently acquired the 14th largest crypto exchange in the world Poloniex –present in over 100 countries.
“A Vehicle to Perpetrate Fraud”
Last year, Goldman Sachs CEO Lloyd Blankfein labeled cryptocurrencies as A Vehicle to Perpetrate Fraud during a Bloomberg interview. Further stating that price volatility of the bitcoin does not qualify as a suitable currency. He later said that the firm has no “Biotin strategy” and does not intend to develop one.
The Crypto Disruption
In January, Blankfein denied claims that the firm is considering launching its own bitcoin dedicated trading desk. In regard to the Bank of America filings, the firm cites operational risk as it has to upgrade its current Know-Your-Customer (KYC), Sanction and Corruption and Anti-Money-laundering policy (AML) and system to accommodate the complex nature of cryptocurrencies.
