Goldman Sachs Backed Loans as a Result of Cryptocurrency

Goldman Sachs Backed Loans as a Result of Cryptocurrency

Giant Investment bank Goldman Sachs has allowed its clients to borrow cash using Bitcoin as collateral. The Bitcoin backed loan model was granted using a special lending department within the bank. According to experts, the move could trigger greater financial sector involvement in the cryptocurrency market.

Typically, large banks’ acceptance of a new asset class is viewed as a significant indicator of progress in the industry. The offering of over-the-counter bitcoin options is a considerable achievement for Goldman Sachs, which is one of the first financial institutions of its kind.

The bank’s spokesperson told CoinDesk of how they recently secured a lending facility that is now used to lend collateralized money on BTC where the borrower retains ownership of the Bitcoin. All this credit procedures are structured in line with the 24-7-365-day risk management guidelines.

What is a Bitcoin Backed Loan?

A Bitcoin backed loan allows anyone to take advantage of the volatile nature of the cryptocurrency market by borrowing fiat currency such as US Dollars, Sterling Pounds, Euros and more. The loans are initiated by individuals who deposit their BTC into a Cryptopay account as collateral. In exchange, they receive a loan in their desired currency which they can then spend as they please on whatever they choose. Backed Loans enable margin lending over the blockchain and exemplify a decentralized financial system built on top of Ethereum.

Such loans give borrowers the ability to borrow fiat currency by fronting up to your Bitcoin (or other cryptocurrency) as collateral, without having to sell.

As Goldman Sachs (GS) continues to lay the groundwork for its highly-anticipated entrance into the cryptocurrency market, a new report finds that banking giants are steadily increasing their involvement in virtual assets, with many firms already participating in initial coin offerings (ICOs), buying and selling cryptocurrencies, and exploring the possibility of launching their own crypto products.

BlackRock, the world’s largest asset manager with $10 trillion in assets under management, announced the launch of a blockchain-focused exchange-traded fund (ETF). In a $400million funding arrangement, the company will also partner with a blockchain company, Circle.

Effects of The Giant Investment Bank’s Loaning Actions

Propy, the blockchain real estate platform, announced a partnership with Abra to offer its customers access to home loans using cryptocurrency holdings as collateral. This new feature is included in all real estate purchases on the Propy platform.

Just last month, a new homeowner purchased an apartment in Austin, Texas, via USDC.homes, which is powered by Decentralized Title, Time and Location (DTTL) technology. USDC.homes is a platform where buyers can purchase properties from sellers who use the platform’s DTTL technology. In this case, the seller who sold the property on the USDC.homes platform is the apartment’s previous owner.

El Salvador is currently in the process of securing funds for its Bitcoin-backed bonds, which intend to amass $1 billion in funding for the development of BTC City and to increase the size of the country’s BTC reserves.

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.