Goldman Sachs has created a new product which will take clients’ Bitcoin holdings as collateral and offer them cash loans
American investment banking company, Goldman Sachs, has created a Bitcoin-backed cash loan product. In an email interview to Coindesk, a spokesperson for Goldman Sachs said, “We recently extended a secured lending facility where we lent fiat collateralised on BTC; BTC being owned by the borrower.”
Crypto Loan
In decentralised finance, people and institutions come together and lend fiat or crypto by taking either fiat or crypto as collateral.
Several smart contracts are used and deployed to track the value of any asset, and then depending upon that value; a collateralised debt is created.
Goldman Sachs Digital Assets Efforts
Goldman Sachs has a dedicated digital assets team, and last month they also traded Bitcoin over the counter (OTC) to Galaxy Digital for the first time.
“Some of the crypto-related products and services already offered by Wall Street include wealth management, trading, and investment banking. Lending to companies that provide virtual currencies as collateral, is the next step,” Bloomberg quoted Damien Vanderwilt, co-president of Galaxy Digital Holdings as saying.
They have now created a Bitcoin-backed home loan product wherein their client’s Bitcoin holdings will be kept as mortgage, and in exchange for that, cash loan will be extended. The finer details of margin or collateral value calculation has not been disclosed at this moment.
Who Else Is Offering Such Products?
Milo Credit, an American real estate fintech company, had launched a crypto-based mortgage lending product earlier this year. Milo had said that customers could pledge their Bitcoin (BTC) holdings and take a loan against that for buying real estate.
Josip Rupena, CEO and founder of Milo, had said in a press release: “The world is changing rapidly, with how consumers make and invest their $2 trillion in crypto wealth. With our new crypto mortgage, we can expand our offerings to consumers that other banking firms previously denied just for having crypto.”
Last month, Silvergate Capital had also extended a $205 million loan to Microstrategy with Bitcoin as collateral. Michael Saylor, the CEO of Microstrategy is famous for being bullish on Bitcoin, and holds over 125,000 Bitcoins, according to a Coindesk report.