Goldman Sachs has been in the news recently for giving its clients the option to trade Bitcoin. Providing them a way to be exposed to the crypto market without having to purchase any coins. In this way, the clients can place wagers on the price of Bitcoin. Making it so they’re invested in the market without being directly invested in crypto.
Goldman has recently announced a partnership with Galaxy Digital that is aimed at expanding its trading activities. This move with Galaxy opens an avenue for Goldman Sachs to start trading bitcoin futures. The partnership was borne out of necessity since banks cannot handle Bitcoin directly. Galaxy helps to bridge this gap by providing Goldman Sachs with access to trade bitcoin futures without handling any coins.
With the rising popularity of bitcoin, clients of banks have been increasingly pressuring their banks that they would like exposure to the market. A lot of clients currently have most of their portfolios in the stock market and want the diversity that comes with investing in the cryptocurrency market. In light of this, banks have begun to look for ways to help their clients invest without having to buy the coins themselves.
While banks are not allowed to purchase digital coins, there is nothing that says that banks cannot offer wagers on the price of bitcoin and other assets.
The bank finally began giving bitcoin trading options by offering non-deliverable forwards (NDFs) to its clients. NDFs are transactions where two parties agree to exchange a currency at a fixed rate at a particular date.
Following this, Goldman Sachs then announced that they were going to expand from bitcoin and offer ether futures and options to their clients.
Goldman Sachs Will Open The Floodgates
Goldman has not always been the biggest fan of cryptocurrencies. The megabank had said that it did not consider the asset a legitimate asset. So there was no way for their clients to actually get in on the market. With the bull market this year and bitcoin going up so much, the bank finally relented and has started to offer options to trade bitcoin.
This is looking like a take-back of what they had said about bitcoin not being a legitimate asset. Although they have not officially come out to say this.
With the bank starting its crypto trading desk, there is no doubt that once there is a significant success of Goldman’s investment, other banks will start to follow the same part. Offering their clients different ways to invest, bet, and trade on crypto coins without needing to buy any of the coins themselves.
Hugh Son, a CNBC reporter, was on CNBC to talk about the Goldman ramp-up.
With regards to other banks starting to get into bitcoin, Son said, “Nobody wants to do something first at a bank. They always want to wait until somebody else does it.” Further stating that ”Then once they see that it works, all the other banks will jump in because they’ve been getting the inbounds too from their clients.”
Partnering up with Galaxy Digital helps provide an entry for Goldman into the crypto space. One which banks are heavily regulated in.
Galaxy Digital is an investment bank with ex-Goldman executives in its ranks. They’re well-versed in working with regulated companies, acting as a bridge between them and the crypto market.
With their announcement of their crypto trading desk earlier in the year, it made Goldman the first investment bank to start trading cryptocurrencies.
Galaxy Digital’s president Damien Vanderwilt believes that more banks being in the market will help to reduce the asset’s volatility.