2 major new Bitcoin products show how Wall Street has reversed its stance on crypto
It wasn’t too long ago that Wall Street rejected Bitcoin altogether. Now some of the same institutions that bashed cryptocurrency are beginning to introduce offerings with Bitcoin at the center.
News of two significant products was released this week alone. On Tuesday, Fidelity Investments announced that it would allow individuals to allocate a portion of their retirement savings to Bitcoin. This option is the first of its kind, and a huge decision from the nation’s largest 401(k) plan provider. Following on Thursday, Goldman Sachs revealed it offered its first Bitcoin-backed loan. A spokeswoman for Goldman told Bloomberg that it lent cash to a borrower with Bitcoin as collateral—a significant move from the major bank, which oversees more than $2 trillion in assets under supervision.
Both moves are part of a larger trend in Wall Street’s embrace of crypto.
“Bitcoin has transitioned from a contrarian idea to a consensus trade on Wall Street,” Anthony Pompliano, founder of fund Pomp Investments and a Bitcoin bull, told Fortune. “Banks and financial institutions are realizing that Bitcoin is good for business.”
A growing trend
In November 2021, the value of the overall cryptocurrency market hit an all-time high of $3 trillion. That month, Bitcoin, the largest cryptocurrency by market value, also hit its record $69,044, and Ether, the second largest, hit its high of $4,878.
Since then, many of the most critical legacy banks, institutions, and firms changed their tune about Bitcoin and cryptocurrency. To keep up with the hype and rising demand, there’s been an uptick in Bitcoin offerings and services by Wall Street.
Goldman, for example, went from saying Bitcoin isn’t a “long-term store of value or investable asset class” in June 2021, to being responsible for many firsts in the traditional space when it comes to cryptocurrency products.
In March, prior to its first Bitcoin-backed loan, Goldman was the first U.S. bank to execute an over-the-counter cryptocurrency transaction. Last year, even as it criticized the space, the bank also relaunched its trading desk for cryptocurrencies after shutting it down for three years and began trading Bitcoin futures for its clients.
Alongside Goldman, Jefferies Financial Group is offering banking services for cryptocurrency users.
Other major banks like JPMorgan Chase and Morgan Stanley have created dedicated teams for cryptocurrency and blockchain. Recently, banks including Deutsche Bank, Wells Fargo, Citigroup, Capital One, Barclays, Credit Suisse, UBS, Bank of America, and BNY Mellon have been hiring for cryptocurrency-related jobs like never before.
Wall Street has also jumped into the cryptocurrency market. In 2021, institutional investors traded $1.14 trillion of cryptocurrencies on leading exchange Coinbase—that’s up from $120 billion in 2020 and more than twice the $535 billion from retail investors, the Wall Street Journal reported.
“Banks are forever going to be trying to play catch-up,” Michael Moro, CEO of digital currency brokerage Genesis, told Bloomberg. “Crypto is going to move way faster than banks can. We have every bank in the world pretty much having some sort of crypto, blockchain working group.”
Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.