Goldman Sachs has given its first-ever Bitcoin-backed cash loan to a borrower. The move aims to lead the traditional institution in operations related to digital assets. Goldman, which first established its crypto desk in 2018, granted the loan through its secured lending facility.
"We recently extended a secured lending facility where we lent fiat collateralized on BTC; BTC being owned by the borrower. The interesting piece for us was the structure and the 24-7-365 day risk management," the bank told CoinDesk.
Other Banks Could Also Start The Facility
These loans are riskier as the Bitcoins value is not stable and it can plunge anytime. In the near future, other Wall Street banks will also provide loans on Bitcoin some of them are already in plans to introduce such loans early.
The borrower received a cash loan backed by Bitcoin as collateral for the first time by this bank.
How To Get a Crypto-Backed Loan?
Through this facility, Bitcoin holders are able to represent their digital assets as collateral in the bank to borrow USD or fiat currency in return.
The banking giant has allowed this service as it found healthy risk management in the digital asset.
Many Wall Street banks are making their plans for crypto-related operations. In March, Cowen established its digital assets unit to gain more customers from the digital assets space.
The well-known asset management firm BlackRock announced its partnership with Circle, a leading operator of USDC stable coin. The partnership included BlackRock's involvement in a $400 million funding round with Circle, according to Forbes.
Goldman Sachs' move has also suggested that traditional institutions are shifting to provide crypto-backed loans as an easy way to access increased capital.
The current changes in crypto-related operations by Wall Street moguls indicate their increased interest in the crypto world and more progressive policies for digital assets in a few years.