Goldman Sachs has extended its cryptocurrency push by offering a Bitcoin-backed loan. This will allow customers to borrow fiat currency against the security of digital gold.
Goldman Sachs debuted a Bitcoin-backed loan offering to contribute to the institutional adoption of cryptocurrencies. The US investment bank, with roughly $2.5 trillion worth of assets under management, lent cash to its undisclosed borrower, collateralized by Bitcoin. Such loans are provided with 24/7 risk management. The underlying volatility of BTC makes such a loan fall into the risky category. Thus, such a move by Goldman Sachs indicates its support for the cryptocurrency sector.
A Bitcoin-backed loan allows the owner of an asset to borrow fiat currency, such as dollars, after depositing their Bitcoin as collateral. Since Bitcoin is unstable, its value can be lost at any moment. In such a case, the borrower may be asked to add additional collateral against the risk of liquidation of assets.
Goldman Sachs began exploring Bitcoin-backed loans around December of last year and is actively expanding into the digital asset space. The bank said earlier this week that it wants to tokenize real assets in the form of non-fungible tokens (NFTs).
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Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.