Milestone for Goldman Sachs After 1st Over-the-Counter Crypto Trade

  • Goldman Sachs is about to be the first major US bank to trade an over-the-counter crypto transaction.
  • The trade between Goldman Sachs and Galaxy Digital involved a Bitcoin-linked non-deliverable option.
  • Institutional investors view the move as a huge step in crypto market developments.

Goldman Sachs is close to being the pioneering major bank in the U.S. to trade an over-the-counter crypto transaction.

According to a report by CNBC, Goldman Sachs transacted a Bitcoin-linked instrument called a non-deliverable option to financial management firm Galaxy Digital. Notably, institutional investors consider the transaction a big step in the development of crypto markets. This sentiment is due to the nature of over-the-counter trades.

Goldman Sachs’ Asia Pacific Head of Digital Assets Max Minton commented:

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.

Unlike the CME Group Bitcoin assets that Goldman Sachs began transacting last year, the bank faces bigger risks in this recent transaction as its principal in the trade.

Damien Vanderwilt, Co-President Galaxy Digital, noted Goldman’s involvement in the transaction is a gesture of increased maturity of the asset class for institutional investors:

“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 said in an interview.

Vanderwilt added that the options to trade 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.”

The report also claimed that hedge funds have been looking into Bitcoin derivative exposure by making wagers on its price without directly owning it or to hedge existing exposure to these digital assets.

Crypto-based firms such as Galaxy, Genesis, and GSR mostly control the market for said instruments.

Andre Kazantsev, Goldman Sachs Global Head of Crypto Trading, acknowledged the high demand for alternatives related to digital assets exists, saying:

“The next big step that we are envisioning is the development of options markets.”

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