A wealthy guy named Mike Novogratz has distinguished himself as a member of his high school wrestling team, as a member of the National Guard, and as a partner at Goldman Sachs. Now the 53-year-old investor has plans to throw major money into starting cryptocurrency-based bank.
That specific quote—“the Goldman Sachs of crypto”—comes from “a person familiar with [Novogratz’s] plans,” the leading anonymous source in a recent Bloomberg story on the investor’s cryptocurrency ambitions. Novogratz’s crypto-enabled merchant bank will be called Galaxy Digital Holdings, and will be active in four cryptocurrency arenas—trading, taking principal stakes in initial coin offerings, selling market research, and asset management. And in true 1990s style, Novogratz even plans to list Galaxy on the Toronto Stock Exchange.
These are ambitious goals, to put it mildly, but it’s refreshing to see that the notorious blockchain bull is putting his money where his mouth is. Novogratz previously referred to cryptocurrency as “the biggest bubble of our lifetimes” yet in September suggested bitcoin could achieve $40,000 by the end of 2018. Now he’s preparing to sink his own $400 million of his own crypto-assets (spread across bitcoin, ether, ICOs, and stakes in companies like Xapo, Bitstamp, and Ripple Labs) to build something that’s never existed before.
We’ll surely be watching closely. For now, let’s contextualize this “Goldman Sachs of crypto” sound byte. It’s a tall order for Mr. Novogratz to fill when cryptocurrency technology isn’t even old enough to drive yet. Turning 150 next year, Goldman Sachs boasts nearly $1 trillion in assets. Its revenue in 2017 alone was $30 billion, and $8 billion of that was profit. Goldman Sachs is the time-tested institution that was Uncle Sam’s bond buyer of choice during the recession. Goldman alumni regularly run the Treasury Department, for crying out loud.
Galaxy Digital Holdings will launch with a fraction of a fraction of these resources, and it will be operating in what’s relatively well-contextualized as “the Wild West of finance.”
There’s surely money to be made with a merchant bank active in the cryptocurrency space, but cowboys who win too much at a poker table have a tendency to get shot. Then again, even Goldman Sachs had to start somewhere.