Updated 18 May, 2021

Goldman Sachs Now Offers Brand New Bitcoin Derivatives Trading

Key Takeaways:

  • Goldman Sachs has officially executed its first trades in bitcoin
  • The firm will continue to work toward broadening their crypto involvement

Goldman Sachs Moves On to Crypto Trading

Goldman Sachs, a dominant US investment bank, is looking to seize a larger portion of the hot and rapidly growing cryptocurrency market that now boasts a valuation of over $2tn. The banking giant was until now exploring the option to offer Bitcoin-related investments to its large base of institutional clients.

To tap into the $1tn Bitcoin market, Goldman Sachs is now executing its first trades in Bitcoin derivatives. The investment bank has launched trading with non-deliverable forwards, a derivative instrument tied to Bitcoin’s price. The bitcoin-linked financial products are the first cryptocurrency trades for the firm.

The cryptocurrency trading desk now exists within the bank’s Global Currencies and Emerging Markets trading division. The crypto desk took its first steps in March this year. This happened after growing demand from institutional clients pushed the bank to relaunch the desk. The first attempt had failed in 2018 as it coincided with bitcoin’s devastating price crash.

Initially, the revived Goldman cryptocurrency trading desk will serve its prime brokerage and private bank clients. So in later stages, the bank is planning to further push into the fledgling market by adding more cryptocurrencies and allowing broader access.

Who’s the Man Who Will Be Heading This Venture & The Regulatory Framework Surrounding This

The trading desk is headed by Rajesh Venkataramani, a Goldman partner. “Looking ahead, as we continue to broaden our market presence, we are selectively onboarding new liquidity providers to help us in expanding our offering,” Mr. Venkataramani said in the memo from May 6.

Goldman Sachs, or any other regulated investment bank, cannot yet offer direct investing in Bitcoin or any cryptocurrency. Why? This is due to the lack of regulatory framework that will guard investors and provide rules by which digital asset trading could occur. However, Goldman Sachs has been mulling getting involved with crypto assets for a while now. The CEO of the investment giant, David Solomon, has expressed a strong desire to dive into the emerging crypto market. Before that could happen to its fullest extent and Goldman could trade cryptos as a principal, Mr. Solomon would want to see regulations in force.

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