Coinbase, the largest crypto exchange in the US, was revealed to be the first company to take out Wall Street’s first Bitcoin-backed loan from Goldman Sachs. On May 3, Bloomberg reported that Coinbase had taken up a Bitcoin-backed loan from Goldman as a strategy to strengthen relations between the crypto and trading worlds. Coinbase Institutional Head Brett Tejpaul remarked:
“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.”
Although the loan’s cash value was not specified. The loan is 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 monitoring system, but it also compels Coinbase to fill up its BTC collateral if prices drop too low. In a May 2 blog post, asset management firm Arca stated that potential borrowers are seeking more such possibilities. “[This loan] demonstrates institutions ability to utilise new tools with old techniques,” it stated.
While Bitcoin and other crypto-backed loans are common in the crypto industry, particularly on DeFi protocols, they are uncommon in traditional banking, where crypto is viewed as too risky and unpredictable as collateral.
“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 also outlined his vision for decentralised social media networks that will enable free expression. On May 2, he told the Milken Institute that Twitter, under new owner Elon Musk, had the chance to “basically embrace adopting a decentralised protocol” that the network could run on. He added:
“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.”
Armstrong argues that a decentralised social media network would enable content producers to choose their own moderation standards and that access to all material would be democratised rather than algorithmically determined. This would prevent some material streams on a platform from being suppressed, allowing consumers to see anything they want.
Read more:
- Goldman Sachs boss meets with FTX CEO to discuss potential IPO debut in March
- Goldman Sachs issues the first bitcoin-backed loan
