Goldman Sach’s executive cautions investors of bitcoin ETFs

The head of Goldman Sachs Private Wealth Management’s investment strategy group, Sharmin Mossavar-Rahmani told investors about the risk of bitcoin Exchange-Traded Funds.

Mossavar-Rahmani said that Bitcoin is still too much like gambling. As such, they are not ideal to be an investment for someone’s retirement. The comment about Bitcoin ETF came after the news that Goldman Sachs was considering getting into the space.

Mossavar-Rahmani did not recommend having Bitcoin as an investment. However, she believed that people could still use digital currencies for speculative purposes.

“It is not an investment, and people should not be investing in cryptocurrencies, in bitcoin, in the ETF, as part of an investment portfolio,” she said. “However, people can use it if they want to use it for pure speculation.”

Goldman Sachs planned to work with BlackRock and Grayscale. The company also wanted to become an “authorized participant” (AP) in the Bitcoin ETF space.

As an authorized participant, Goldman Sachs would have an important role. That is to ensure that the ETF shares align with its assets. To do this, the company must ensure that the ETF shares show their real market value.

Skepticism over Bitcoin

Mossavar-Rahmani is not the only person who stays skeptical of Bitcoin and cryptocurrencies. Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), shares the same view.

Gensler pointed out the volatile nature of digital currencies. He also highlighted the possibility of cryptocurrencies being used for illegal activities. The examples he gave were money laundering and ransomware.

Despite Mossavar-Rahmani’s skepticism of Bitcoin, Goldman Sachs also explained how the Bitcoin ETFs could benefit institutional investors. One of them is that ETFs offer low-cost trading. Besides, ETFs can afford protection for investors and have better liquidity. Compared to close-ended trusts and funds, ETFs have a smaller possibility of tracking error. After all, when it comes to portfolio management, ETFs use standard accounting and reporting processes.

The topic of Bitcoin ETFs has become trending after the SEC approved spot Bitcoin ETFs on Wednesday, January 10. This approval means that more investors will get access to Bitcoin.

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