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FinanceBitcoin

Leaked documents show what Goldman Sachs really thinks of Bitcoin

Jeff John Roberts
By
Jeff John Roberts
Jeff John Roberts
Editor, Finance and Crypto
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Jeff John Roberts
By
Jeff John Roberts
Jeff John Roberts
Editor, Finance and Crypto
Down Arrow Button Icon
May 27, 2020, 6:30 PM ET

News that Goldman Sachs would be briefing clients about Bitcoin set the cryptocurrency world abuzz on Wednesday morning. Would the famous investment bank deliver a seal of approval to digital currency? Would the briefing cause the price of Bitcoin to soar?

Alas, for crypto fans, the answer came as a resounding no when slides of Goldman’s presentation, dryly titled “US Economic Outlook & Implications of Current Policies for Inflation, Gold and Bitcoin,” leaked on social media.

One slide offered the withering perspective that cryptocurrencies like Bitcoin are not even an asset class in the first place, and that they offer neither cash flow nor a hedge against inflation.

“We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients,” the slide concluded.

That wasn’t the worst of it. A follow-up slide suggested the other most notable feature of cryptocurrency is as a “conduit for illegal activity,” including Ponzi schemes and ransomware, while another invoked the Dutch tulip mania. Ouch.

Not surprisingly, Bitcoin’s many ardent fans on Twitter lashed out at Goldman Sachs. These included Tyler and Cameron Winklevoss, the twins who gained fame for their legal tussles with Mark Zuckerberg before becoming Bitcoin billionaires. They jabbed the bank over its alleged ignorance and hypocrisy about cryptocurrency:

Bitcoin does "not generate cash flow like bonds." Because it's not a bond. And the sky is blue.

— Cameron Winklevoss (@cameron) May 27, 2020

Goldman Sachs: In 2019, $2.8 billion in Bitcoin was sent to currency exchanges from criminal entities.

Fun Fact: Goldman Sachs facilitated $6 billion in money laundering via 1MDB scandal between 2012-13.

Double standard much?

— Tyler Winklevoss (@tyler) May 27, 2020

Meanwhile, Ryan Selkis, the CEO of crypto research firm Messari, revived Goldman’s “vampire squid” moniker to compare the bank’s performance to Bitcoin.

https://twitter.com/twobitidiot/status/1265639605707169792

And Neeraj Agrawal of the industry group Coin Center couldn’t resist reminding the bank of its 2018 flirtation with building a crypto trading desk—and the questionable hairstyles of its would-be Bitcoin executives.

Remember when Goldman Sachs had a double manbun bitcoin division https://t.co/vqLzh7OXdr pic.twitter.com/tAGL2CvCcZ

— Neeraj K. Agrawal (@NeerajKA) May 27, 2020

A spokesperson for Goldman Sachs declined to comment on the Twitter contretemps, saying, “I’m not sure there’s much to add.”

In the bigger picture, Wednesday’s dustup is likely to become just another footnote in the long-running feud between Bitcoin boosters and the traditional financial establishment—a feud that has seen Warren Buffett tar Bitcoin as “rat poison squared” and JPMorgan CEO Jamie Dimon declare it a “fraud.”

Despite the social media melodrama, however, there are signs the two worlds are coming together. Earlier this month, the Wall Street Journal reported JPMorgan was taking on crypto giant Coinbase as a banking client while, on Wednesday, Coinbase announced it was acquiring a trading firm composed of traditional financial executives—including one from Goldman Sachs.

More must-read finance coverage from Fortune:

—Saving lives vs. saving the economy is a false tradeoff, economists say
—Real unemployment rate soars past 24.9%—and the U.S. has now lost 33.5 million jobs
—17% of unemployed workers aren’t looking for work—and that’s warping the official unemployment rate
—Does Apple’s stock buyback strategy make sense in this market?
—Goldman Sachs doubts there will be a Round 3 of PPP loans for small businesses
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Why the banks were ready for the financial impact of coronavirus

Subscribe to How To Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic

About the Author
Jeff John Roberts
By Jeff John RobertsEditor, Finance and Crypto
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Jeff John Roberts is the Finance and Crypto editor at Fortune, overseeing coverage of the blockchain and how technology is changing finance.

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