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Cryptocurrencies suffer as Goldman Sachs reins back trading desk ambitions

Uncertainty over how cryptos might be regulated in future had made the bank nervous over the project
Goldman
Too volatile even for this bank?

Reports that Goldman Sachs has dropped plans to set up a trading desk due to regulatory concerns sent cryptocurrencies tumbling again.

Bitcoin shed 4% to US$6,414 today and Ethereum fell 1.5% to US$229. 

READ: Goldman Sachs to begin Bitcoin futures trading, says the cryptocurrency is not a fraud

That makes a US$15 fall for Bitcoin over the past two days.

Goldman did not officially confirm the reports, but Business Insider, citing sources close to the bank, said the uncertainty over how cryptos might be regulated in future had made it nervous over the project.

Instead, the US bank will focus on custody services, where it will hold crypto assets securely for large clients wanting to invest in Bitcoin, Ethereum and other currencies.

Custody or how to ensure cryptos are held securely is one of a number of issues taxing regulators after several hacking attacks on central exchanges.

How to classify tokens or cryptocurrency is another headache with the US SEC indicating that many of recent ICOs or cryptocurrencies might be classified as securities and come under its control.

Goldman has been one of the most visibly active of the bulge bracket banks in crypto space.

In April, Justin Schmidt was appointed as head of its digital asset markets.

READ: Bitcoin and cryptos hit as SEC stalls on ETF decision

The bank has also backed digital payment platform Circle, which earlier this year acquired the Poloniex cryptocurrency exchange.

Naeem Aslam, a commentator at thinkmarkets.com says that even if Goldman Sachs does decide not to trade cryptos from its own desk, it’s unlikely to make much difference to the development of the market.

The issue that matters most is if there is an Ethereum future, he said. 

“A delay in this process is something natural because we have a major bear market trend, but as long as the Ether future listing process stays intact, I think the future remains bright.”

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