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Goldman Sachs now offering Bitcoin derivatives to investors

Updated: Jul 25, 2024
Published: May 7, 2021
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Cryptocurrency adoption is slowly entering the banking sector. As a matter of fact, Goldman Sachs is one of the leading banks venturing into the market. The investment bank is now offering Bitcoin derivatives to its investors.

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Goldman Sachs offers Bitcoin-related products

Goldman Sachs, one of the leading investment banks in the United States, has begun offering its investors access to non-deliverable forwards (NDFs). An NDF is a normally short-term cash-settled forward contract. The amount is never actually exchanged which is why they are considered non-deliverable. Thus, the NDF is a derivative tied to the price of the leading cryptocurrency paid out in cash.

Bloomberg reported that the bank is protecting itself from Bitcoin’s volatility by purchasing and selling BTC futures in block trades on CME Group. In effect, Goldman Sachs is conducting the transactions with the help of Cumberland DRW as its trading partner. Besides that, the report added that Goldman Sachs has yet to be active in the spot market. That said, it started offering the wagers to its clients last month.

Max Minton, Goldman’s Asia-Pacific head of digital assets, told Bloomberg that “Institutional demand continues to grow significantly in this space, and being able to work with partners like Cumberland will help us expand our capabilities. The new offering is paving the way for us to evolve our nascent cash-settled crypto-currency capabilities.”

Goldman Sachs is becoming more involved in the cryptocurrency space following years of traditional banks ignoring the industry.  In March, the bank announced that it would offer its wealthy clients access to Bitcoin investment vehicles in the current quarter. Clearly, the company's entry into the forwards market has increased its ability to help big investors take positions.

In addition, Justin Chow, global head of business development for Cumberland DRW, said, Goldman Sachs serves as a bellwether of how sophisticated, institutional investors approach shifts in the market. We’ve seen rapid adoption and interest in crypto from more traditional financial firms this year, and Goldman’s entrance into the space is yet another sign of how it’s maturing.”

Traditional banks starting to get involved in crypto

Granted, traditional banks are not yet taking major positions in the spot market. That said, they are beginning to offer crypto-related products. In that respect, Goldman Sachs is leading the way in this effort. Indeed, the bank recently led a $15 million funding round for Coin Metrics. This makes it one of the leading investors in the company.

Other leading US investment banks such as Morgan Stanley and JPMorgan are also entering the market. As a result, they are now providing their investors with access to crypto-related products.

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