Speaking at a banking conference, Mr Blankfein warned that "mismatched regulation" could lead financial institutions to seek out bases in regions more friendly to their work.
"Operations can be moved globally and capital can be accessed globally," he stated.
"It's not arbitrage to thwart [regulation]. It's about a need to compete with rivals."
His comments have already caused a media storm, leading a Goldman Sachs spokesman to clarify that the bank has "no intention" of getting rid of its European operations.
Earlier this month, the Basel Committee on Banking Supervision laid out proposals requiring banks to increase their minimum tier one capital levels from two per cent to seven per cent.
An article in the Financial Times explained that the real figure will be closer to ten per cent because retained earnings, some tax credits and minority investments from equity will be subtracted from calculations of the level.
By Tony Aynsley