Goldman Sachs is no stranger to test the waters with crypto, with institutional clients seeking greater exposure in the space.
Last week, Goldman became the first major US bank to conduct an over-the-counter crypto options trade with Galaxy Digital, which some market players believe is a precursor to more institutional adoption of digital assets.
“Crypto markets need large, credible and creditworthy counterparties to grow the space,” a source who works with digital assets at a major investment bank told Marketingwithanoy. “Goldman and other Wall Street banks will eventually bring that.”
The 153-year-old company is headquartered in New York City with offices around the world and has $2.47 trillion in assets under supervision. Galaxy Digital’s trading unit facilitated and executed the transaction with the investment bank in the form of an undeliverable Bitcoin option.
This means that the company will not trade or hold the underlying cryptocurrency directly, but will take an option with a cash payment, Tim Grant, head of Europe at Galaxy, told Marketingwithanoy.
“Trading itself doesn’t mean much, but the fact that it happened and opens up the opportunity for Goldman Sachs to trade this risk is hugely significant, and this is just the beginning,” Grant said. “Once you get to that part, that set of hurdles, you’re intellectually and operationally free to do other things. It’s not trade itself, it’s that this will allow us to move in a multitude of directions.”
Goldman did not provide additional information requested by Marketingwithanoy prior to publication.
The company is no stranger to crypto, or more specifically Bitcoin. It first set up a cryptocurrency trading desk in 2018, but closed it for three years, only to restart in early 2021. Since then, the bank has delved further into the crypto world by allowing investors to trade Bitcoin derivatives via block trades on CME Group in May 2021 and giving clients access to an ether fund through Galaxy Digital, among others.
“I expect the [crypto] room to become much more institutionalized in the coming months [and] every investment bank will be involved in the space in the coming year,” said Kevin Kang, one of the founders of BKCoin Capital. “Crypto will be a part of every bank’s offering and trade like a different asset class.”