Goldman Sachs Provided Coinbase With The First Bitcoin-Backed Loan.
The mystery corporation that took out Wall Street’s first Bitcoin-backed loan from Goldman Sachs has been identified as Coinbase, America’s largest crypto exchange.
As of 2021, Goldman Sachs manages $2.5 trillion in assets.
On Tuesday, Bloomberg reported that Coinbase has taken up a Bitcoin-backed loan from Goldman Sachs as a measure to strengthen relations between the crypto and trading worlds, with Coinbase Institutional Head Brett Tejpaul saying:
“Coinbase’s work with Goldman is a first step in the recognition of crypto as collateral which deepens the bridge between the fiat and crypto economies.”
The loan’s dollar value was not specified, but it was secured by a percentage of Coinbase’s overall holdings of 4,487 Bitcoin, which are currently worth roughly $170 million. The loan has a 24-hour risk management system, but it also compels Coinbase to top up its BTC collateral if prices drop too low.
While Bitcoin- and other crypto-backed loans are prevalent in the crypto business, notably on DeFi protocols, they are a rarity in traditional finance, where crypto is considered as too dangerous and volatile as collateral.
In a May 2 blog post, asset management firm Arca stated that potential borrowers are seeking for more such possibilities. “[This loan] indicates institutions’ willingness to use new instruments with old procedures,” it stated.
“It is far more likely that Goldman is seeing a lot of demand for this type of transaction and is just testing the waters before making a bigger splash.”
Meanwhile, Coinbase CEO Brian Armstrong has outlined his vision for decentralized social media platforms enabling free speech. On May 2, he told the Milken Institute that Twitter, under new owner Elon Musk, has the chance to “basically embrace adopting a decentralized protocol” that the network could run on.
Armstrong argues that a decentralized social media platform would enable content creators to choose their own moderation policies, and that access to all content would be democratized rather than algorithmically determined.
Armstrong argues that a decentralized social media platform would enable content creators to choose their own moderation policies, and that access to all content would be democratized rather than algorithmically determined. This would prevent some material streams on a platform from being suppressed, allowing users to see anything they want.
If Twitter does not seize the chance, Armstrong points out that teams are already working on decentralized social media networks, which he calls DeSo, where people may own their own identities.
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