Goldman Sachs' entry into the bitcoin-backed loan market is sending ripples across the industry and marks a turning point for the industry in aspects of liquidity, legitimacy, and customer choice.
As the Wall Street powerhouse expands its Bitcoin operations, Goldman has apparently launched its first ever loan facility backed by Bitcoin.
The arrangement, which has gained popularity in the Bitcoin market in recent years thanks to emerging organizations, allows a bitcoin owner to get fiat money such as US dollars by pledging their BTC as collateral to the bank. If the value of bitcoin falls, the client may be obliged to raise their collateral, and if they do not, they risk being liquidated.
For the first loan, the Wall Street behemoth loaned cash backed by bitcoin possessed by the borrower, according to a bank spokesperson. The agreement appealed to Goldman because of its framework and 24-hour risk management, she said in an email to Bloomberg.
Bitcoin investors have freq...