Report: Goldman Sachs started trading Bitcoin futures with Galaxy Digital
Wall Street giant Goldman Sachs Group Inc (NYSE: GS) started trading Bitcoin (BTC/USD) futures with the help of Mike Novogratz’s crypto merchant bank Galaxy Digital, CNBC reported Friday morning.
Goldman solidifies first mover advantage
Goldman is the first major bank to start trading cryptocurrencies through a counterparty and comes just a month after the bank established its new cryptocurrency trading desk, according to CNBC. Reports of Goldman using Galaxy were confirmed by Galaxy’s co-president Damien Vanderwilt. Galaxy will provide buy and sell order quotes on Bitcoin futures from the CME Group.
Goldman’s decision is part of the company’s efforts to assist large institutional clients like hedge funds in wagering on Bitcoin and other digital assets. Goldman’s head of digital assets for the Asia-Pacific region Max Minton told CNBC in a statement:
Our goal is to equip our clients with best-execution pricing and secure access to the assets they want to trade. In 2021, this now includes crypto, and we are pleased to have found a partner with a broad range of liquidity venues and differentiated derivatives capabilities spanning the cryptocurrency ecosystem.
Trend to reverberate on Wall Street
The breadth and depth of the cryptocurrency market are growing as more banks allow clients like family offices, pensions, and hedge funds to trade Bitcoin. Goldman Sachs’ decision to partner with “liquidity providers” like Galaxy signals how customers are pressing big banks for exposure to Bitcoin.
Ultimately, this will stabilize the cryptocurrency industry and other banks will be offering clients the creation of BTC-structured notes and relative value exchange between BTC and Ethereum (ETH/USD), among other new ways to invest via derivatives. Vanderwilt told CNBC:
There’s a whole dynamic with the major banks that I’ve seen time and time again: safety in numbers. Once one bank is out there doing this, the other banks will have [fear of missing out] and they’ll get on-boarded because their clients have been asking for it.
Some scepticism remains
Banks will offer clients methods of investing in Bitcoin using derivatives, including arbitrage bets on the value gap between Bitcoin and CME Bitcoin futures, according to CNBC. Despite this and other perceived benefits, skepticism in Goldman remains. Sharmin Mossavar-Rahmani, Goldman’s own Chief Investment Officer for its Investment Strategy Group, referred to the crypto as “a bubble” that’s not suitable for investment purposes.
But that may not matter as Goldman and other banks exist to satisfy the wants and needs of their clients. If one bank doesn’t want to offer crypto services to clients, they can walk down Wall Street to one of the rival banks on the same block. Vanderwilt explained:
If the phone rings enough times and clients are trying to get exposure, you eventually figure out how to do it for them safely, understanding that your role in the world is to intermediate exposure safely, not to act as a fiduciary.