Goldman Sachs said institutional demand for cryptocurrency is rising, and it is actively broadening its market capabilities to meet that demand.
Goldman Sachs and Barclays have joined a $70 million Series A funding round for Elwood Technologies, the institutional crypto trading platform founded by billionaire British hedge fund manager Alan Howard.
According to the Financial Times, the round was joined by crypto-friendly German bank Commerzbank, crypto investment manager Galaxy Digital, and Dawn Capital. According to the report, the company was valued at around $500 million during the fundraising round.
Despite the recent drop in cryptocurrency markets, Elwood believes traditional financial institutions such as hedge funds and banks will continue to be interested in investing in cryptocurrencies. Elwood’s funding round was already agreed to and in the works before the latest price drop, which has seen roughly 15% of the total crypto market cap wiped out since May 9 according to CoinMarketCap.
Elwood Technologies CEO James Stickland called the fundraising “another validation of the longevity of crypto,” dismissing recent price declines:
“We’re getting investment from financial institutions that aren’t expecting to get massive returns in 15 minutes. They’re investing in the infrastructure, I think it’s a reassurance message.”
Elwood Technologies offers a crypto portfolio management system for institutional investors that includes crypto market information and trading infrastructure, as well as an interface that connects to crypto exchanges, liquidity providers, and custodians.
Goldman Sachs’ global head of digital assets Mathew McDermott commented on the transaction, saying it demonstrated the firm’s “continued commitment” to cryptocurrencies, adding:
“As institutional demand for cryptocurrency rises, we have been actively broadening our market presence and capabilities to cater to client demand.”
Goldman Sachs’ investment marks the bank’s expansion into crypto assets. In early May, the investment bank was the first to offer a loan backed by Bitcoin (BTC) to cryptocurrency exchange Coinbase. It has long been interested in the field, referring to digital assets and the Metaverse as “megatrends” in March.
Another instance of the Wall Street behemoth courting crypto firms involved a meeting between Goldman CEO David Solomon and FTX CEO Sam Bankman-Fried, which included Solomon’s offer to assist FTX with future funding rounds and regulatory compliance.
Elwood Technologies will continue to be majority-owned by Alan Howard, who was the primary investor before the Series A round. Howard co-founded the hedge fund Brevan Howard, which will launch its “BH Digital” crypto investment division in September 2021.
