Goldman Sachs is dropping its plan to open a trading desk for cryptocurrencies, Business Insider reported Wednesday, as the firm sees the regulatory environment as ambiguous.
The Wall Street bank has been considering the launch of a new trading operation focused on bitcoin and other digital currencies for the past year. Goldman executives concluded that many steps still need to be taken, most of them outside the bank’s control, before a regulated bank would be allowed to trade cryptocurrencies, according to Business Insider.
“In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering,” Goldman Sachs said in a statement to CNBC.
Bitcoin fell 5.3 percent Wednesday after the report, according to Coinbase data.
Brian Kelly of BKCM, a crypto hedge fund, said the Goldman report was behind the negative sentiment in bitcoin Wednesday morning.
“They were not a part of the ecosystem yet, but to the extent that they represent the institutional herd, this is a negative,” he said.
The U.S. Securities and Exchange Commission warned last year that some of the coins issued in ICOs could be considered securities, meaning trading them would have to comply with federal securities laws. Bitcoin bulls got a ray of hope that U.S. regulators might approve bitcoin exchange-traded funds from ProShares but those bids were rejected. Those two rebuttals follow on the heels of several other crypto ETFs denied this summer, as the SEC’s rejected bids from GraniteShares, Direxion and the Winklevoss brothers.