After Goldman Sachs backed Circle just acquired cryptocurrency exchange Poloniex for $400 million, it appears as if the merchant bank wishes to make sure it is not exposed to any risk itself.
Goldman Sachs Group Inc., in a Monday filing with the SEC, the bank has labelled cryptocurrencies a potential business risk.
The bank wrote this:
“Although the prevalence and scope of applications of distributed ledger technology and similar technologies is growing, the technology is also nascent and may be vulnerable to cyber attacks or have other inherent weaknesses. 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.”
This Feb. 26 filing, which constitutes its annual report for the fiscal year 2017, Goldman believes that it might be impacted because of its work with clients and the companies it has invested in.
The risks highlighted – particularly on the cryptocurrency front – may form part of the reason why Goldman has kept the cryptocurrency market at arms length, with CEO Lloyd Blankfein denying a past report that the investment bank was eyeing the launch of a dedicated trading desk for bitcoin.
He said at the time.
“We’re a prime broker and so if our clients are going to do it, we’re going to do it. A principal bitcoin business where we’re going long and short, market making, so far we’re not,”
Goldman is an investor in payments startup Circle (which announced yesterday that it had acquired crypto exchange Poloniex) and is one of a number of investment banks that offers its customers access to bitcoin futures markets.