As a Wall Street first, the biggest U.S. Bitcoin exchange has borrowed money from Goldman Sachs and collateralized it with Bitcoin, paving the path for others to follow suit.
Coinbase, the biggest crypto exchange in the United States, has been identified as the mysterious company that obtained the first Wall Street loan secured by Bitcoin from Goldman Sachs.
By the year 2021, Goldman Sachs expects to have $2.5 trillion in assets under management. In an interview with Bloomberg on Tuesday, Coinbase’s institutional head Brett Tejpaul said that the Goldman Sachs-backed Bitcoin loan was taken out to strengthen linkages between the crypto and tradfi worlds.
It’s a first step towards the acceptance of crypto as collateral that strengthens the link between the fiat and crypto economies that Coinbase and Goldman have taken.
It’s not clear how much the loan was worth, but it was backed by a share of Coinbase’s 4,487 Bitcoins, which are now worth $170 million. If Bitcoin prices fall too low, Coinbase will have to replenish its BTC collateral as part of the loan’s risk management.
When it comes to conventional finance, it’s a rare sight to witness a loan secured by Bitcoin or other cryptocurrencies.
A blog post from Arca Asset Management on May 2 said that prospective borrowers want to see more of these possibilities. That loan “demonstrates the readiness of institutions to use new instruments with traditional procedures,” according to the statement.
We believe Goldman is only testing the waters before making an even greater splash, given the high demand for this sort of deal.
A tweet about a Bitcoin-backed loan caused a lot of discussions. Bitcoin podcaster Preston Pysh said on Wednesday that the loan is “no surprise the SEC is recruiting people” in reference to it.
Armstrong’s online presence
Brian Armstrong, CEO of Coinbase, has outlined his vision for free expression on social media networks that are decentralised. According to him, Twitter has a chance under new owner Elon Musk to “basically embrace adopting a decentralised system” that would allow it to function.
A lot of cryptos is about economic liberty, and I believe that freedom in all forms should be defended. “Freedom of expression is an alternative.”
According to Armstrong, decentralised social media platforms will let content producers choose their own moderation standards, allowing for more control over who may see what. This would enable people to see any information they choose without fear of it being limited by a platform.
There are already teams working on decentralised social media systems where people may own their own identity on the site, which Armstrong calls DeSo, if Twitter does not embrace the chance.
Bluesky, the decentralised social media network created by Twitter co-founder Jack Dorsey, has been under development since 2019. Bluesky’s mission is to promote the use of technology that allows “creators to govern connections with their audiences and developers to innovate freely.”
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