Goldman Sachs is reportedly dropping its plans to open a desk for trading cryptocurrencies, in a move which yesterday sent the prices of popular coins such as ethereum and bitcoin skidding.
Sources familiar with the matter told Business Insider that Goldman Sachs was nervous to continue with the plans while future global regulatory frameworks for cryptocurrencies remain unclear.
Internal teams working on the proposition reportedly came to the conclusion over the last few weeks that there remains too many obstacles for a regulated bank to trade crypto, in order for the firm to move forward with such plans. Instead, it will focus on other digital asset servic es such as a custody product.
A Goldman Sachs spokesperson would not confirm the reports, but told City A.M. that “at this point, we have not reached a conclusion on the scope of our digital asset offering”.
The news sent major cryptocurrencies flying, as bitcoin fell over six per cent to reach a five-day low at $6,908 (£5,352) on the Luxembourg-based Bitstamp exchange. Other big coins such as Ethereum, Litecoin and Ripple fell nine per cent, 7.1 per cent and 7.7 per cent respectively.
US stocks with exposure to cryptocurrencies also slumped, according to Bloomberg.
Bitcoin has lost almost half its value so far this year, as trading volumes on cryptocurrency exchanges have fallen by nearly 80 per cent. Its overall market value is now around $223bn, down from over $800bn at the start of the year according to Coinmarketcap.
Cryptocurrencies had instead been trading at a high in recent weeks, powered by support from high-profile companies including Goldman Sachs itself.
The firm was said to be considering a plan to offer custody for outside cryptocurrency funds earlier this month, sources told Bloomberg. No timeline was set on when the bank would roll out its services.
Goldman Sachs hired its first head of digital asset markets earlier this year, but has yet to make any concrete steps towards a crypto offering.