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Investors Flock to US Money Market Funds Amid Banking Crisis

by Blockchain NewsMarch 27, 2023

As the global banking crisis continues to fuel concerns among investors, the popularity of US money market funds is surging. According to Emerging Portfolio Fund Research (EPFR) data obtained by the Financial Times, more than $286 billion has been invested in these funds so far in March. The inflows are the highest seen in a month since the emergence of the Covid-19 pandemic.

The top beneficiaries of this trend are Goldman Sachs, JPMorgan Chase, and Fidelity. The figures show that Goldman Sachs’ money funds have grown by 13%, receiving $52 billion in investment. JPMorgan’s funds have seen inflows of nearly $46 billion, while Fidelity has enjoyed nearly $37 billion in investment. These funds are offering their best yields in years, as the US Federal Reserve continues to raise interest rates in a bid to curb inflation.

Money market funds are a popular choice for investors during uncertain times because they offer high liquidity and low risk. The current crisis in the banking sector has only served to amplify these qualities. The fear of liquidity constraints and potential bank failures has caused many investors to seek out safer investments, and US money market funds are delivering the kind of stability that investors crave.

In the seven days leading up to March 22, total money market fund assets increased by $117.42 billion to $5.13 trillion, according to a report from the Investment Company Institute. Government funds increased by $131.84 billion, while prime funds decreased by $10.83 billion. Tax-exempt money market funds shrank by $3.61 billion.

The influx of cash into money market funds is driven by fears surrounding the health of the financial system. Banks in the US and Europe are facing liquidity constraints as monetary policy tightens, and investors are wary of the potential risks associated with these developments.

For example, on March 24, shares of Deutsche Bank dropped due to an increase in the cost of insuring against its potential default risk. The bank’s five-year credit default swaps (CDS) climbed 19 basis points from the previous day, closing at 222 bps, according to Reuters, citing S&P Global Market Intelligence data. Meanwhile, in the US, there is still uncertainty surrounding regional banks, as insurance on default for financial services firms Charles Schwab and Capital One soared last week. The latest data shows that credit default swaps jumped over 80% to 103 bps as of March 20.

The surge in popularity of money market funds underscores the ongoing concerns of investors in the face of a global banking crisis. With interest rates continuing to rise, and fears of liquidity constraints and bank failures mounting, it seems likely that this trend will continue in the months ahead.

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Goldman Sachs to Launch Data Service to Classify Digital Assets

by Blockchain NewsNovember 3, 2022

Investment bank and Financial service firm Goldman Sachs has revealed it is set to release a data service to classify hundreds of digital coins and tokens so institutional investors can comprehend the rapidly growing digital asset class.

Created in collaboration with global index provider MSCI and crypto data firm Coinmetrics, the data service is called Datanomy. The name was derived from the combination of data and taxonomy – a branch of science focused on naming and classifying the natural world.

Datanomy is created to address the issue of many digital assets not being classified into their respective sectors. As the digital asset ecosystem has been expanding over the years, it could appear overwhelming to grasp if not familiar with the various sectors of the expansion.

Coin Metrics CEO Tim Rice said large asset managers wanted an “adult framework” to understand digital assets better and invariably discuss them.

Rice added,

“We’ve organized it in an intuitive manner that should help asset managers come into this asset class in a much more standardized fashion.This is the next phase of getting the underpinnings of the industry lined up so that everybody can embrace it, and we can figure out what the next directional move in the market is.”

Users can access Datanomy either as a subscription-based data feed or via Marquee – a platform by Goldman Sachs used as a digital storefront for institutional investors.

In addition, Datanomy provides users with analysis and research, as well as benchmarking performance, managing portfolios, or creating investment products depending on the sectors that include decentralized finance, smart contract platforms, metaverse, or value transfer coins.

Anne Marie Darling, head of the client strategy for Goldman’s Marquee platform, noted,

“We’re trying to create a framework for the digital asset ecosystem that our clients can understand because they increasingly need to think about performance tracking and risk management in digital assets.”

Digital assets on Datanomy would be divided into classes, sectors, and sub-sectors based on the usage of the tokens or coins. According to Darling, this will enable asset management firms and money managers at hedge funds to familiarize crypto with how equities can be debatable as industry sectors like finance or technology or themes like growth versus value stocks.

Notably, Datanomy is just one of the products Goldman Sachs has launched in recent times to achieve its expansion goal beyond Bitcoin-focused products in the crypto market. In June, the investment bank launched an Ethereum-linked derivative product to offer institutional investors indirect exposure to the cryptocurrency market.

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Tagged : Asset / Bitcoin / Blockchain / Coinmetrics / Cryptocurrency / DeFi / DIGITAL / Goldman Sachs / MSCI / News

Goldman Sachs Reportedly Raising Funds to Acquire Celsius by $2 bn, Reports says

by Blockchain NewsJune 27, 2022

American multinational investment bank Goldman Sachs Group Inc reportedly has shown interest in buying up embattled crypto lender Celsius Network. Coindesk reported the news, citing two people familiar with the matter.

Goldman Sachs is notably gauging interests and soliciting commitments from several investors in the traditional financial ecosystem and Web3.0 space. With about $2 billion in capital investment, Goldman Sachs is looking forward to buying the firm at a huge discount. Following the past $400 million funding round Celsius conducted back in 2021, its valuation has placed at over $3 billion at the time, making it one of the few crypto lenders with a unicorn status.

Celsius came off as one of the companies severely hit by the cryptocurrency market meltdown of the past few weeks. The company halted its key operations, including withdrawals, citing the extreme market conditions as the cause. While Celsius showed off its challenges with the withdrawal halt, many industry stakeholders have posited that the platform might have become insolvent, sending more shivers down the broader ecosystem.

Celsius network has over $12 billion in Assets Under Management and over $8 billion in assets lent out to investors. With the notion of bankruptcy on the horizon, Celsius Network is also acting in a way that will heighten people’s suspicion.

The startup has tapped the services of Citigroup, Alvarez & Marsal, and restructuring attorneys from Akin Gump Strauss Hauer & Feld to help advise it on the best course of action following its platform’s operational halt.

One of the recommendations that have been given to the firm is that it should consider filing for bankruptcy. Should it trail this path eventually, more investors will be looking at taking over the firm through acquisition. One of these includes competing with a Swiss lender, Nexo, who has an active offer to acquire the company’s collateralized loan portfolio.

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Tagged : Celsius Network / Enterprise / Goldman Sachs

Goldman Sachs Reportedly Raising Funds to Acquire Celsius, Reports says

by Blockchain NewsJune 27, 2022

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Tagged : Celsius Network / Enterprise / Goldman Sachs

Goldman Sachs Launches First Ethereum-Linked Derivatives Product

by Blockchain NewsJune 14, 2022

American investment banking and financial institution giant, Goldman Sachs Group Inc has started trading a type of Ethereum-linked derivatives, as it seeks to expand its reach in the crypto markets beyond Bitcoin-focused products.

Bloomberg first reported the trade on Monday, noting that the product executed is an Ethereum non-deliverable forwards, a derivative that pays out based on the price of ether.

Billed to offer institutional investors indirect exposure to the cryptocurrency, Goldman Sachs has finally shown its readiness to put its money where its mouth is with regard to its embrace of digital currencies.

The financial institution has been backing a lot of crypto startups, including but not limited to CertiK, a blockchain security outfit, a sign that it believes in the future of the technology, and the need to have the right partners to bolster its growth.

According to the report, Marex Financials was named as the counterparty to Goldman Sachs for the new derivatives product.

Goldman Sachs has exhibited a series of upheavals as it relates to the digital currency ecosystem. While it was amongst the first banks to offer trading desks for Bitcoin trading, it paused for a while and resumed these activities back in March last year as reported by Blockchain.News at the time.

While the move to add Ethereum-based derivatives products is a way to consolidate its Bitcoin trading position, the move has spelt more ambitions than was previously led on.

For what it is worth, the digital currency ecosystem is reeling in a massive price correction that has seen the industry’s biggest coins fall back to price levels not seen in about 18 months.

That Goldman Sachs could float a new product with the industry’s bearish momentum is evidence that its claims that institutional demand in crypto is rising is true, and it aims to be at the forefront of this embrace.

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Tagged : Bitcoin / Ethereum / Goldman Sachs

Investment Giant Goldman Sachs Offers the First Bitcoin-backed Lending Loan

by Blockchain NewsApril 29, 2022

New York-based multinational investment bank Goldman Sachs announced that the investment bank has launched a bitcoin-backed lending loan.

This is the first over-the-counter bitcoin option traded in March by Goldman Sachs Group to further provide digital asset services to Wall Street investors. The company said lenders can use the bitcoin they own as cash collateral to make loans.

A spokeswoman for the investment bank said Goldman’s interest was drawn to the bitcoin-backed lending facility because of its unique structure and required 24-hour risk management, adding that this step marks the entry of Goldman Sachs Group into a new line of business.

Last May, Goldman created a cryptocurrency trading desk to make markets in digital currencies such as Bitcoin. The move marked its major step in digital assets investing.

Goldman also assigned Galaxy, the crypto merchant bank founded by Mike Novogratz, to serve as its liquidity provider to help it equip its clients with best-execution pricing and secure access to the assets they want to trade.

MacroStrategy, a subsidiary of MicroStrategy, a US business software firm, announced Tuesday that it secured a $205 million term loan from Silvergate Bank, a crypto-focused bank.

Last month, Goldman Sachs Group Inc. reviewed how it can meet increasing client demand to own and invest in Bitcoin, while still staying on the right side of the law.

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Tagged : Bitcoin / Blockchain / Goldman Sachs / Loan

Goldman Sachs Lobbying FTX Exchange for an IPO Move

by Blockchain NewsApril 22, 2022

American investment banking giant Goldman Sachs is notably lobbying FTX Derivatives exchange if the crypto trading platform decides to go public through Initial Public Offering (IPO) shortly.

According to a report by the Financial Times, Goldman Sachs’ Chief Executive Officer (CEO), David Solomon, met with FTX Founder Sam Bankman-Fried back in March as both discussed many areas in which they can collaborate.

Primarily, Goldman Sachs was reportedly bolstering its role as an advisor to FTX related to the exchange’s dealings with the Commodity Futures Trading Commission (CFTC). The American banking giant will also like to be the broker should FTX decide to go public, assuming a similar role when Coinbase Global Inc went public on the Nasdaq Exchange last year.

Besides these salient aspects, the duo also discussed private fundraising options, collaboration on the market making in crypto trades, and Goldman offering traditional banking services to FTX, according to the sources that spoke to the Financial Times.

FTX Exchange is a trading platform that is making waves in many aspects. Following the enormous funds raised by the crypto unicorn in the past couple of years, it hit a $32 billion valuation in January. The exchange’s positive growth momentum has attracted a number of traditional legacy investors, including the Ontario Teachers Pension Plan and Softbank, amongst others.

The massive valuation of FTX has made the next logical milestone pegged at an IPO, and should Coinbase’s success story be trailed, the Bankman-Fried platform could also hit it off with investors in the public market.

Besides its global operations, FTX has a dedicated and regulated subsidiary in the United States dubbed FTX.US, a startup that has grown its reputation for inking partnerships with sports teams and its strategic acquisitions, the latest of which is LedgerX, a CFTC-regulated derivatives service provider.

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Tagged : Exchanges / Ftx Exchange / Goldman Sachs / Sam Bankman-Fried

Goldman Sachs Joins Investors to Fund CertiK as it Tops $2B Valuation

by Blockchain NewsApril 8, 2022

New York-based blockchain security startup CertiK has finally confirmed to raise $88 million from investors, led by Tiger Global, Advent International, with participation from Goldman Sachs and existing investors such as Sequoia and Lightspeed Venture Partners.

Dubbed its Series B3 round, the company said the funding was oversubscribed and it comes off as its fourth financing round to date bringing the total capital raised to $230 million. Following the latest raise, the startup’s valuation has now topped $2 billion.

Considering the security demands in the digital currency ecosystem, as many as 3,200 blockchains and enterprise clients utilize CertiK’s solutions to safeguard their platform. Thus far, the company has helped these clients secure as much as $300 billion, a role that investors have acknowledged over and again.

“CertiK is a mission-critical blockchain cybersecurity platform in a massive market and has already become a clear leader in the industry with a high-quality product that provides all-round security for blockchain, smart contracts, and Web3,” said Steve Ward, Managing Director at Insight Partners. “We look forward to partnering with CertiK’s best in class founding team, complete with a team of leading crypto security thought leaders as they continue to grow and Scale-Up.”

Despite the latest economic downturn experienced in the digital currency ecosystem, CertiK has continued to grow its revenue which surged 12x in 2021, and profits growing more than 3000x. As detailed by the firm, it will continue to develop all of its security solutions, including Skynet, LeaderBoard, and Know-Your-Customer (KYC)- a mandatory process of identifying and verifying the client’s identity when opening an account and periodically over time, in a bid to meet the expectations of its broad-based clients.

“Given increasing trends in rug-pulls, we now see KYC playing an important role in Web3 security,” said CertiK Founder and CEO, Ronghui Gu. “KYC, together with Smart contract auditing and 24/7 monitoring of threats, will further strengthen our offer around end-to-end Web3 security services.”

Other security outfits like ConsenSys have also pulled funds from investors in recent times, the latest of which is $450 million raised by the firm to push its valuation to $7 billion.

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Tagged : Certik / Consensys / Finance / Goldman Sachs

Goldman Sachs Sets to Offer OTC Ether Options Trading

by Blockchain NewsApril 7, 2022

Goldman Sachs Group, a US multinational investment bank headquartered in New York City, announced recently that it plans to add over-the-counter (OTC) Ether options trading to its list of cryptocurrency product offerings. The global bank stated that the move to add OTC Ethererium options comes from rising interest from its customers.

Andrei Kazantsev, Goldman’s Head of Crypto Trading, talked about the move during a client webinar seen by Bloomberg media outlets and stated that the investment bank is planning to launch the cash-settled ETH options “in due course.”

Kazantsev did not offer a definite date for the rollout but merely mentioned that the trading would open up soon.

Customer interest seems to be shifting towards the world’s second-largest cryptocurrency. It heads towards its widely anticipated switch from Proof of Work (PoW) to a Proof of Stake (PoS) model. George Lewin-Smith, an associate on Goldman’s digital-assets team, stated that Ether has become “more of an investable asset class,” according to clients.

In recent months, institutional giants like Goldman have also become more interested in Ethereum. Market demand for the second-largest cryptocurrency has increased partly because it is witnessing a rapid supply depletion thanks to the EIP-1559 update initiated last year and the expected shift to PoS, which are both considered significant upgrades among Ethereum enthusiasts.

The shift will see Ethereum ditch a mining consensus favouring a validator consensus, which has encouraged investors to accumulate Ether to capture staking yield. The move to embrace the Proof-of-Stake model also implies that Ethereum will become more energy-efficient, unlike Bitcoin which still relies on Proof of Work’s energy-intensive mining model.

Giving Clients Access to Crypto Funds

The move by Goldman comes just a few weeks after the investment bank executed an OTC options trade for Bitcoin. Last month, Goldman executed the first-ever over-the-counter (OTC) crypto transaction in the form of a Bitcoin non-deliverable option through collaboration with Michael Novogratz’s crypto investment management firm Galaxy Digital.

The development marked a significant milestone in Goldman’s digital assets capabilities as well as for the broader evolution of the asset class. The move represented a continuation of the bank’s efforts to improve its crypto capabilities.

Although Goldman is yet to offer spot crypto trading, the investment banking giant has continued to dive deeper into cryptocurrency since it restarted its Bitcoin trading desk in March last year.

Last month, Goldman started providing its interested clients access to an Ether (ETH) fund issued by Galaxy Digital. The bank is getting an introduction fee for customers that brings them to the “Galaxy Institutional Ethereum Fund.”

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Tagged : Exchanges / Goldman Sachs / OTC ETHER OPTIONS TRADING

Institutional Crypto Exposure Hits 51%, Goldman Sachs Study Shows

by Blockchain NewsApril 4, 2022

Out of 172 institutional clients surveyed, leading global investment bank, Goldman Sachs found out that 51% of them had crypto exposure, according to a report published by Arcane Research.

The survey noted that institutional interest in cryptocurrencies was witnessing strong growth because crypto exposure rose from 40% in 2021 to 51% in 2022.

Source: Arcane Research

Furthermore, this growth is expected to increase. Per the report:

“Of the 172 surveyed clients, 60% responded that they expect to increase their digital asset holdings in the next one to two years.”

Goldman Sachs eyes rolling out crypto investment services

Goldman Sachs has been gearing up for the crypto space in recent weeks, given that its website is giving digital assets a keen eye.

The newly appointed global head of digital assets at Goldman’s private wealth management division, March Rich, recently disclosed that the bank was considering availing a “full-spectrum” of crypto investments through derivatives, physical Bitcoin, or traditional investment vehicles.

Therefore, Goldman Sachs is edging closer to rolling out its first investment vehicles for crypto assets for clients in its private wealth management group.

Rich noted:

“Some Goldman clients feel like we’re sitting at the dawn of a new Internet in some ways and are looking for ways to participate in this space.”

She added:

“We are working closely with teams across the firm to explore ways to offer thoughtful and appropriate access to the ecosystem for private equity clients, and that is something we look forward to delivering in the near term.”

The bank recently disclosed that it was looking at ways of meeting increasing client demand to own and invest in Bitcoin while still staying on the right side of the law, Blockchain.News reported.

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Tagged : Arcane Research / Crypto / Cryptocurrencies / Goldman Sachs / Institutional Investment / Statistics