Nasdaq-listed cryptocurrency exchange Coinbase (NASDAQ: COIN) has been revealed as the mysterious firm that took out Wall Street’s first Bitcoin-backed loan from Goldman Sachs. The firm took out the loan in a bid to deepen ties between the crypto and traditional finance world.

Brett Tejpaul, head of Coinbase Institutional, was quoted in a Bloomberg report explaining the significance of the loan:

Coinbase’s work with Goldman is a first step in the recognition of crypto as collateral which deepens the bridge between the fiat and crypto economies.

The dollar value of the loan itself wasn’t disclosed, but Goldman Sachs had revealed last week it was collateralized by Bitcoin owned by the previously undisclosed borrower. Bitcoin-backed loans, it’s worth noting, aren’t new in the cryptocurrency sector, but are novel for Wall Street giants.

Lenders in the cryptocurrency space, including Babel Finance, even let Bitcoin mining firms pledge their mining machines as collateral to borrow cash. The collateral on these loans is often held by a qualified custodian.

Coinbase, according to its 2021 annual report, held 4,487 BTC, worth around $177.3 million at the time of writing, with each coin trading at around $39,500 at the time of writing. The company’s cash and cash equivalents were, at the same time $7.1 billion, showing a defensive approach.

In a report published by crypto hedge fund Arca, it’s noted that Goldman Sachs may be seeing client demand for these types of loans. The report reads:

These types of bilateral agreements are rarely done in a vacuum. It is far more likely that Goldman is seeing a lot of demand for this type of transaction and is just testing the waters before making a bigger splash.

To Goldman Sachs, the deal was interesting as it required 24-hour risk management. The bank, it’s worth noting, traded its first over-the-counter bitcoin options in March as it slowly moves into the cryptocurrency space.

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