Goldman Sachs Leaders Move to Crypto, State Street Not in a Hurry to Move into Crypto Assets, and More
The crypto market is bleeding with Bitcoin trading around $4,000 and major coins are in the red, but there is still a lot going on in the crypto industry – both good and bad.
The crypto market may only be a decade old but has managed to attract some of the biggest names from Wall Street – and Goldman Sachs in particular. Founded 149 years ago, Goldman Sachs is one of the largest investment banks in the world and has more than $919 billion in assets.
Former employees of the giant investment bank have gone on to take on important positions in governments, politics, technology, and now crypto. Here are some of Goldman Sachs former employees that are making waves in the crypto industry.
Mike Novogratz is perhaps one of the most well-known ex-Goldman employees who is bullish and vocal on the crypto market. After raising $250 million in February, Novogratz left the investment bank after 19 years of service and opened Galaxy Digital – and claimed that he was building the Goldman Sachs of crypto before changing his statement.
Fred Ehrsam, the co-founder of Coinbase, one of the largest cryptocurrency exchanges in North America worked briefly for Goldman Sachs on a foreign exchange trading desk. Dan Morehead; the founder, CEO, and co-chief investment officer of Pantera Capital, an investment firm focused on blockchain technology, began his career at Goldman Sachs where he worked as a mortgage-backed securities trader.
Other notable crypto heads who passed through Goldman Sachs include Richard Kim (Galaxy Digital), Vishai Gupta (Circle), Michael Bucella & Mathew Goetz (BlockTower Capital), Miyuki Matsumoto (Distributed Global), James Radecki (Cumberland Mining), Paul Chou & Juthica Chou (LedgerX), Jeff Horowitz (Coinbase), Esther Babb (Gemini), Breanne Madigan (Blockchain), Bill Barhydt (Abra), and Joseph Lubin (Ethereum & ConsenSys).
State Street: no hurry to venture into crypto custody
State Street is one of the biggest names in the financial world. The bank has more than $2.7 trillion in assets under management (AUM) and $33.12 trillion under custody and management. It prides itself in being the world’s largest custodian bank.
The banking giant has stated that there is currently no sense of urgency to move into crypto custody. While there is no urgency, the bank acknowledges that there is a high level of interest.
“There is no sense of urgency on the part of our clients to move into these assets right now. When they do, we want to meet them there,” said Jay Biancamano, the managing director for digital product development and innovation of State Street while speaking at the American Banker BlockFS conference in New York.
He further added that “there is a very high level of interest but no need to move because currently none of our clients are looking for us to house these assets in custody.”
Fidelity Investments announced in October that it was launching Fidelity Digital Assets Services LLC, a separate company that handles cryptocurrency custody for enterprise investors. Two crypto firms, Coinbase and Bitgo have been granted custodian licenses.
Biancamano stated that the SEC is engaging with traditional players before it formulates regulation around crypto regulation.
However, the securities regulatory agency has made its position clear on people and entities that promote a security and fail to disclose that they were paid for the endorsement. Floyd Mayweather, a boxer and DJ Khaled, a hip-hop star, were slapped with fines for breaching Section 17(b) of the Securities Act of 1933.
SEC settles with Mayweather and Khaled
According to the SEC, Mayweather did not disclose the payments he had received from touting three ICOs including $100,000 from Centra Tech Inc. while Khaled was paid $50,000 by the same ICO but kept mum about it.
The two celebrities did not admit or deny the findings but agreed to pay disgorgement, penalties, and interest. Mayweather agreed to pay a total of $614,775 and Khaled settled his case with a payment of $152,725.
Stephan Avakian, SEC’s Enforcement Division co-director said, “with no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.”
The SEC warned investors about following the advice given on social media, citing that the influences are paid to promote certain projects even though they are not investment professionals.
Bitmain launches crypto index
Bitmain, the largest chipmaker of cryptocurrency mining hardware announced that it is launching a crypto index fund that tracks the performance of the largest and most liquid digital assets. The aim of the fund is to lure new investors into the crypto space that is having a bad year.
The new index service has two types of prices: one that updates every second in real time so that investors have the most up-to-date information and another that is updated once a day at a specific time.
“The index is developed to provide institutional and retail investors with transparent, timely, methodology-based, and investable benchmark of the most active cryptocurrencies traded globally,” said Bitmin in a press release.
Bitmain’s index fund data will be sourced from several exchanges that include Bitfinex, Binance, Bitstamp, Bittrex, GDAX, Gemini, Huobi, Itbit, Kraken, OKEX, and Poloniex.
Bitcoin mining, bear market, and renewable energy
Over the years, bitcoin mining has matured from a bedroom activity to an industrial scale activity supported by corporations. The end result is an industry that consumes the same amount of energy as Denmark and more than 159 countries such as Ireland and a number of African countries.
CoinShares; a crypto investment and research firm concluded via a 19-page report that renewable energy accounts for more 77.6 percent of Bitcoin’s total energy usage. The report highlighted that if Bitcoin’s is trading at $4,000 per coin, the average miner is running a loss or paying less for the mining equipment than the research firm’s estimate.
China previously accounted for a lion’s share of miners but currently, less than 60 percent of miners are based in China. Some of these miners are closing shop and setting up new bases in Russia, Canada, Scandinavia, and the U.S. where there is favorable regulation, fast internet connections, mining-friendly climate, and cheap & abundant electricity.