The bank said in a statement that it traded a non-deliverable Bitcoin option, which is a derivative connected to Bitcoin’s price that pays out in cash. Galaxy Digital Holdings Ltd., a crypto financial-services firm founded by former Goldman partner Michael Novogratz, processed the deal. Crypto investors utilize options to reduce risk and increase profits, and over-the-counter transactions are often larger trades that are arranged secretly.
Goldman Sachs Group Inc. has completed its first over-the-counter crypto options trade, marking a significant step forward in the firm’s growth of digital asset offerings to Wall Street investors. Off late, cryptos and NFTs like Phanta Bear NFT have gained massive traction among investors. These investment avenues are now being taken up by multionational banks across the globe.
According to Galaxy, this is the first time a major bank in the United States has done something like this. According to Damien Vanderwilt, co-president and head of global markets at Galaxy, the transaction will “open the door for other institutions to use OTC as a conduit for trading digital assets.”
Bitcoin was avoided by Wall Street banks for years after its inception in 2009. Because of regulatory uncertainties and “know your customer” restrictions, large banks have yet to enter the crypto spot market. According to Bloomberg News, certain institutions, including Goldman Sachs, are looking into more crypto derivatives trading.
In an interview, Vanderwilt remarked, “If you look about crypto today, part of the issue of the industry is that most of the actors in the sector are not players who are familiar to regulators and politicians.” “It enables regulators and the government to see that corporations like Goldman Sachs, which they have known and trusted for decades, would-be participants.”
Last year, Goldman Sachs began trading non-deliverable futures, a Bitcoin-linked derivative that pays in cash. It also offers Bitcoin and Ether exchange-listed options and futures trading. Last year, Galaxy provided liquidity for Goldman Sachs’ first CME Bitcoin futures exchange.
Max Minton, Goldman’s Asia Pacific head of digital assets, stated, “This represents a major advance in our digital assets capabilities and for the broader expansion of the asset class.”