Goldman Sachs Becomes First Major US Bank To Announce Over-the-counter Crypto Trading

Investment banking firm Goldman Sachs has become the first major US bank to announce over-the-counter (OTC) trading of cryptocurrency. With this step, it is pushing further into the nascent market for derivatives tied to digital assets, as per a report in CNBC.

Goldman Sachs traded a bitcoin-linked instrument called a non-deliverable option with crypto merchant bank Galaxy Digital, the two firms reportedly said yesterday.

It reflects the bank¡¯s continued expansion of crypto offerings and demonstrates the continued maturation and adoption of digital assets by banking institutions.

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Statements By Goldman Sachs & Galaxy Digital

According to Galaxy co-President Damien Vanderwilt, Goldman¡¯s involvement is a signal of the increased maturity of the asset class for institutional players such as hedge funds. Goldman is a top player in global markets for traditional assets, he said.

¡°This trade represents the first step that banks have taken to offer direct, customizable exposures to the crypto market on behalf of their clients,¡± Vanderwilt reportedly said in an interview.

The options trades are ¡°much more systematically relevant to markets compared to cleared futures or other exchange-based products. At a high level, that¡¯s because of the implications of the risk banks are taking on; they¡¯re implying their trust in crypto¡¯s maturity to date¡±, he added.

Hedge funds have been seeking derivative exposure to bitcoin, either to make wagers on its price without directly owning it, or to hedge existing exposure to it, the firms said. The market for these instruments is mostly controlled by crypto-native firms including Galaxy, Genesis and GSR Markets.

Max Minton, Goldman¡¯s Asia Pacific head of digital assets, said in a statement ¡°We are pleased to have executed our first cash-settled cryptocurrency options trade with Galaxy. This is an important development in our digital assets capabilities and for the broader evolution of the asset class.¡±

Goldman Sachs has seen high demand for options tied to digital assets, Goldman¡¯s global head of crypto trading Andrei Kazantsev said in December 2021.

¡°The next big step that we are envisioning is the development of options markets,¡± he had said.

Also Read: China To Create Its Own 'NFT Industry', But Not Related to Cryptocurrency

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