Goldman Sachs mulls cryptocurrency services

Bank is in talks with digital currency experts but has not yet formulated a business plan

FILE PHOTO: A Bitcoin sign is seen in a window in Toronto, Canada, May 8, 2014.     To match Special Report BITCOIN-EXCHANGES/RISKS      REUTERS/Mark Blinch/File Photo
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Goldman Sachs is exploring how it could help clients trade bitcoin and other digital currencies, according to a person briefed on the plan.

The New York-based bank is in talks with cryptocurrency experts but has not yet formulated a business plan, a timetable for implementation or made any bitcoin-related investments, according to the person who asked not to be identified talking about internal deliberations. Among the questions the bank is seeking to answer: how to address know-your-customer requirements and how to understand the risks of the volatile currency, the person said.

“In response to client interest in digital currencies, we are exploring how best to serve them in the space,” said Tiffany Galvin, a spokeswoman for the New York-based bank, without elaborating.

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Goldman Sachs’ approach differs from that of JP Morgan chief executive Jamie Dimon, who said last month that bitcoin is a fraud and that he would fire any employee trading it for being “stupid.” The bank does facilitate trades of an exchange-traded note tied to the price of bitcoin.

Others have been more open to the cryptocurrency. The Morgan Stanley chief executive James Gorman said bitcoin is more than just a fad. Former Goldman Sachs and Fortress Investment Group trader Mike Novogratz is starting a US$500 million hedge fund to invest in cryptocurrencies, initial coin offerings and related companies, a person familiar with his plans said last month.

Goldman Sachs is further along with the blockchain technology that underlies bitcoin, and has invested in a startup, Axoni, that is working to bring distributed-ledger technology to financial firms.