The approval of spot Bitcoin exchange-traded funds (ETFs) in the U.S. is “a big psychological turning point” for the cryptocurrency industry, and these ETFs are an “astonishing success,” said Mathew McDermott, global head of digital assets at investment banking giant Goldman Sachs at Coindesk’s Consensus 2024 conference.
Earlier in March, the firm sparked controversy after one of its executive members publicly criticized cryptocurrency, deeming it worthless despite a recent price surge and increased institutional participation.
Sharmin Mossavar-Rahmani, the chief investment officer of Goldman’s Wealth Management unit, said the firm did not consider Bitcoin an investment asset class and that its clients were not interested in products with exposure to Bitcoin.
Mossavar-Rahmani said that Goldman Sachs does not believe in crypto. However, it appears the firm cares more about the industry than the executive stated.
Wall St. Loves BTC!
In April, a filing with the U.S. Securities and Exchange Commission (SEC) showed that Goldman Sachs, alongside Citigroup, Citadel Securities, and UBS, joined the Bitcoin ETF market as an authorized participant for BlackRock’s Bitcoin fund, iShares Bitcoin Trust (IBIT).
This ETF has become the world’s largest Bitcoin ETF, surpassing Grayscale Bitcoin Trust earlier this week. IBIT is among the funds surpassing $20 billion in assets faster than any other ETF in history.
Goldman Sachs was the first bank in the US to provide cryptocurrency OTC services. Starting in 2021, they launched the Bitcoin futures trading product for CME Group, opening the door for customers to contact the ETF fund type. The firm also reportedly mulled over acquiring or investing in collapsed crypto companies.
Other American financial giants, although starting later, have continuously encroached on the cryptocurrency playground over the past few years. JP Morgan launched its blockchain platform in 2020. Citigroup reportedly tested the encryption of private funds on the blockchain.
Not Everyone Is Into BTC Yet
McDermott’s positive comments come from massive inflows into U.S. spot Bitcoin ETFs, which have held over 850,00 Bitcoins for almost five months. This impressive holding, combined with Bitcoin ETFs from other countries, brings the total to a staggering 1,002,343 BTC under ETF management.
Remarkably, this figure represents over 5% of the circulating Bitcoin supply.
The surge in interest from retail and institutional investors in these regulated investment vehicles has led former naysayers to reconsider their positions. However, not all might want to shift their stance, like Vanguard.
In a recent interview, the asset management giant reiterated that it had no plan to expose its investors to Bitcoin and Ethereum ETFs through its brokerage platform. However, the firm said it would continuously evaluate its portfolio and review new product launches.
According to Vanguard, cryptocurrency products do not fit into the company’s portfolio. The company currently focuses on assets such as stocks, bonds, and cash, which Vanguard considers the foundation of a balanced portfolio.
Vanguard’s statements are not surprising. In January, Vanguard announced the suspension of its Bitcoin futures ETF shortly after the SEC approved spot Bitcoin fund trading. In November last year, Vanguard’s former CEO, Tim Buckley, refused to participate in the race to issue a Bitcoin spot ETF with Wall Street competitors.
Many investors in the cryptocurrency market have criticized Vanguard’s move, calling it a wrong and outdated move that could turn the company into the “Nokia of Wall Street.”
Still, the community expects Salim Ramji’s appointment as Vanguard’s new CEO to change the firm’s stance on crypto ETFs. He will take over as CEO of Vanguard in July.
Ramji was head of BlackRock’s ETF division and played a major role in the firm’s journey to Bitcoin ETFs. With the upcoming transition, Ramji faces a balancing act. While he has expressed a desire to make crypto more accessible, he must also ensure consistency with Vanguard’s existing product and service offerings.
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