Blankfein Weighs In On Crypto As A Mature Asset

At a Glance

  • Former Goldman Sachs Chairman and CEO "can see the basis" for crypto, but has some doubts.
  • CFTC Commissioner Tarbert defines bitcoin as a commodity

Earlier this year, reports surfaced that Goldman Sachs was looking into creating a bitcoin-like digital token. That came after reports that several large banks may be investing $50 million to create a digital cash system to settle financial transactions.

Banks have been linked to bitcoin operations by either rumor or confirmed reports for several years. 2019 has served as a renewed case for cryptocurrencies as an investible asset class, with the price of bitcoin more than doubling.

Even with new adoption and a resurgence in price, there are some who still say bitcoin and other cryptocurrencies have room to grow before they can be considered mature assets. Count former Goldman Sachs Chairman and CEO Lloyd Blankfein among them.

“I can see the basis for it. I can see how the world could evolve into that,” Blankfein told an audience at The Global Financial Leadership Conference (GFLC) in Naples, Florida. However, he said, bitcoin still has some questions that need to be answered.

“With some of these cryptocurrencies, you can’t manage the money laundering situation. How could it be a good store of wealth when it could move 10 or 12 percent in a day several days in a row?,” he asked. “And how could it be a good medium of exchange when someone could steal it and you would never know, or you lose the code and it disappears?”

Bitcoin As A Commodity

Though questions remain, large institutions are taking more interest in bitcoin in particular. Large open interest holders of CME Group bitcoin futures contracts were up 38% in the third quarter from the previous year, according to the Commodity Futures Trading Commission (CFTC) Commitment of Traders report.  Bitcoin futures traded over 5,600 contracts per day for the third quarter, equivalent to nearly 28,000 bitcoin.

In a conversation with CFTC Commissioner Heath Tarbert at GFLC, CME Group Chairman and CEO Terry Duffy discussed the status of cryptocurrencies as commodities. Tarbert recently defined ether as a commodity and told Duffy bitcoin qualifies as well.

“Our job is to make sure that whatever it says it does, it legitimately is a commodity class, any disclosures that need to be made are made,” Tarbert said of bitcoin and other cryptos. “But ultimately I see one of the reasons the futures markets to exist is to appropriately value them, and to do so on a CFTC regulated exchange that has all the price transparency and price discovery that these markets have had for 150 years.”

Watch more of the discussion with Blankfein above, and see more highlights from GFLC here.

Evan Peterson is director of corporate marketing at CME Group and managing editor of OpenMarkets.

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