Goldman Sachs’ chief executive backs cryptocurrencies as profit hits record

Goldman Sachs’ chief executive David Solomon underscored the importance of cryptocurrencies as the US bank posted a record first-quarter net profit and revenue on the strong performance of its investment banking and trading businesses.

The lender’s net income rose by 464 per cent from a year ago to $6.8 billion in the three months through to March 31.

Its revenue more than doubled to $17.7bn on an annualised basis, topping analysts’ expectations of $12.6bn.

As activities in the areas of “cryptocurrency, blockchain and the digitisation of money” accelerate, there will be “significant disruption and change in the way money moves around the world”, said Mr Solomon during the bank’s earnings call.

“Many central banks are looking at digital currencies ... working to apply this technology to their local markets and determine the long-term impact on global payment systems,” he said.

“There is also [a] significant focus on cryptocurrencies such as Bitcoin, where the trajectory is less clear as market participants evaluate their possibility as a store of value.” Goldman Sachs, the fifth-largest US lender, is looking to expand its capabilities to support clients’ crypto needs while operating “within the regulatory guidelines”, said Mr Solomon.

Digital currencies are “important to the future of global financial systems”, he said.

His comments came on the same day Coinbase, a trading platform for cryptocurrencies, went public on the Nasdaq.

Its shares opened at $381 and rallied as high as $429.54 before dropping to close at $328.28, giving the crypto exchange a market value of about $86bn.

In an online interview on Wednesday, US Federal Reserve chairman Jerome Powell compared cryptocurrencies to gold.

“They are really vehicles for speculation ... they are not really being actively used as payments. For thousands of years, human beings have given gold a special value that it does not have,” he said.

Goldman Sachs is reportedly working to offer its first investment vehicles for Bitcoin, the world’s biggest cryptocurrency, and other digital currencies to its private wealth management clients. The bank restarted its cryptocurrency trading desk in February.

Tesla, the world’s biggest electric car company, began to accept Bitcoin as payment for its cars last month.

FinTech company PayPal is also offering its US customers an option to use digital currencies in their wallets to pay for purchases at online merchants.

Goldman registered gains across all four of its major business units from January to March.

Its investment banking arm generated a record quarterly net revenue of $3.8bn, up 73 per cent from a year ago, while the global markets business had a revenue of $7.6bn, about 47 per cent more compared with a year ago.

Asset management earned $4.6bn in three months, compared with only $96 million last year. Consumer and wealth management revenue rose by 16 per cent annually to $1.7bn.

“Our first-quarter results underscore the ongoing strength ... [and they] evidenced our successful execution towards the strategic priorities. We delivered the best performance in global markets in a decade,” said Mr Solomon.