Goldman Sachs plans to spend tens of millions of dollars to buy or invest in crypto companies after FTX fiasco

The global cryptocurrency market reached an all-time high of $2.9 trillion in late 2021. But this year, it has shed around $2 trillion as a string of high-profile corporate failures and a perfect storm of geo-political tension, increased interest rates, and credit tightening from the world’s central banks hit crypto companies. As of yesterday, the crypto market cap stood at just $865 billion.

But these events have also created opportunities for bargain hunters, deep-pocket investors, and big banks to scoop up promising crypto firms following the fall of a one-time crypto knight–Sam Bankman-Fried. One of these institutional investors is Wall Street giant Goldman Sachs.

Goldman Sachs is planning to spend tens of millions of dollars to buy and invest in crypto companies following the collapse of the crypto exchange FTX, according to an exclusive report from Reuters, citing Goldman’s head of digital assets Mathew McDermott.

McDermott told Reuters the Wall Street giant is doing due diligence on a number of different crypto companies, without providing additional details. He added that big banks see an opportunity to pick up great crypto firms at discounts. He added that the sudden implosion has reignited the call for regulation in the crypto space and “the need for more trustworthy and regulated cryptocurrency players.”

In an interview last month, McDermott said that Goldman Sachs saw really good opportunities even in the midst of the whirlwind of the FTX collapse. “We do see some really interesting opportunities, priced much more sensibly,” he said.

Goldman’s interest in crypto firms goes beyond just investing, the firm also sees opportunities to recruit great talent laid off from crypto and tech companies, McDermott said.

As we reported, FTX filed for Chapter 11 bankruptcy, on November 11, which quickly rippled across the crypto market. The contagion has since amplified the calls for more crypto regulation.

“It’s definitely set the market back in terms of sentiment, there’s absolutely no doubt of that,” McDermott said. “FTX was a poster child in many parts of the ecosystem. But to reiterate, the underlying technology continues to perform.”

Goldman Sachs is not new to the crypto investing space. Early last year, the Wall Street giant announced the formation Of a new cryptocurrency trading desk to meet increasing institutional demands and offer bitcoin, crypto, and other digital assets to wealthy investors.

At the time, Mary Rich, who was recently named global head of digital assets for Goldman’s private wealth management division, said: ″We are working closely with teams across the firm to explore ways to offer thoughtful and appropriate access to the ecosystem for private wealth clients, and that is something we expect to offer in the near term.”

While the amount of money Goldman plans to potentially invest in crypto firms is smaller compared to its main business, the bank’s willingness to continue to invest amid the sector shakeout shows it senses a long-term opportunity.

Goldman Sachs is not the only firm hunting for bargains. Others also see the current crypto meltdown as an opportunity to shore up their businesses. Mark Bruce, CEO of Britannia Financial Group, told Reuters the firm is building its cryptocurrency-related services “to serve customers who are eager to diversify into digital currencies.

The London-based startup had not been able to do until recently. Britannia is now applying for more licenses to provide crypto services, such as doing deals for wealthy individuals, he told Reuters.

“We have seen more client interest since the demise of FTX,” he said. “Customers have lost trust in some of the younger businesses in the sector that purely do crypto, and are looking for more trusted counterparties.”