Thursday, June 30, 2022

Goldman Sachs Commences OTC Crypto Trading: Report

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Key Takeaways

  • Goldman Sachs has completed its first over-the-counter crypto trade with Galaxy Digital, according to a CNBC report.
  • The trade is one of many signals of Goldman’s belief in crypto as an asset class.
  • Many other institutional players have entered the market in recent months as the digital assets space has grown.

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Goldman is one of many Wall Street giants to embrace crypto in recent years. 

Goldman Completes OTC Bitcoin Trade

Goldman Sachs continues on its path to full-scale crypto adoption. 

The American investment bank has become the first major U.S. bank to execute an over-the-counter cryptocurrency trade, according to a Monday CNBC report. Goldman representatives said that the bank had traded a Bitcoin-linked non-deliverable option with Galaxy Digital, the crypto-native investment banking firm run by Mike Novogratz.

While Goldman has made it clear that it believes in the future of cryptocurrency technology over the past year, launching a dedicated trading desk, announcing its first Bitcoin-related products, and sharing in-depth insights on the potential of an Ethereum-powered Web3, the over-the-counter trade is notable because it marks another first for the investment firm. While Goldman has traded Bitcoin futures on CME in the past, acting as a principal in Galaxy Digital’s over-the-counter trades carries greater risk, the firm told CNBC in a statement. 

“This trade represents the first step that banks have taken to offer direct, customizable exposures to the crypto market on behalf of their clients,” Galaxy co-president Damien Vanderwilt said in a statement on the trade. He added that Goldman’s decision to take on additional risk highlights its “trust in crypto’s maturity to date.”

While Goldman has been one of Wall Street’s biggest crypto advocates of late, it’s not the only institutional player to show interest in the digital assets space. Investment banks, hedge funds, and even insurance companies have rushed to jump on the crypto bandwagon as the market has boomed, often with the view that crypto is a multi-decade play. As the space has grown, the likes of Morgan Stanley, BNY Mellon, and State Street have entered the space, from getting exposure to the asset class through investments to launching Bitcoin-related products and offering custody services. 

Last month, one of Goldman’s biggest rivals, JPMorgan, opened a lounge in the Ethereum-based virtual world Decentraland. It also said that the Metaverse could become a $1 trillion annual market, sharing a view seemingly at odds with the bank’s CEO and resident crypto cynic, Jamie Dimon. 

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies. 

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