Coinbase, America’s largest crypto exchange, has been revealed as the mystery firm that took out Wall Street’s first Bitcoin-(BTC)-backed loan from Goldman Sachs.
It has been reported that Goldman Sachs has $2.5 trillion in assets under management as of 2021. The Bitcoin-backed loan issued by Goldman Sachs had been taken out by Coinbase as a way to deepen ties between the crypto and traditional finance (TradFi) world.
Brett Tejpaul, the head of Coinbase Institutional, said:
“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.”
However, the dollar value of the loan has not been disclosed, but it was collateralized by a portion of Coinbase’s total holdings of 4,487 BTC, worth around $170 million, as of May 4. The loan features 24-hour risk management but requires Coinbase to top up its BTC collateral if prices fall too low.
The report said that while Bitcoin-backed and other crypto-backed loans are commonplace in the crypto industry, especially on decentralized finance (DeFi) protocols, they are curious about traditional finance, where crypto is seen as too risky and volatile as collateral.
Likewise, asset management firm Arca wrote in a Monday blog post that potential borrowers are looking for more such options.
“[This loan] demonstrates the willingness of institutions to utilize new tools with old techniques. 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.”
Coinbase CEO Brian Armstrong has laid out his vision for free speech being enabled through decentralized social media platforms. He told the Milken Institute on Monday that under new owner Elon Musk, Twitter has an opportunity to “essentially embrace using a decentralized protocol” on which the platform could operate.
Thus, he said:
“I think freedom in all forms is worth defending and crypto, a lot of it, is about economic freedom. Freedom of speech is another version.”