Goldman Sachs trade with Galaxy Digital marks first over-the-counter crypto transaction by a major US bank, report says
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- Goldman Sachs is the first major US bank to complete an OTC crypto transaction, according CNBC.
- Goldman traded a bitcoin-linked instrument called a non-deliverable option with Galaxy Digital.
- A Galaxy Digital executive said the options trades are more systematically relevant to markets compared with cleared futures or other exchange-based products.
Goldman Sachs is the first major US bank to trade an over-the-counter crypto transaction, according to a CNBC report on Monday.
The investment bank traded a bitcoin-linked instrument called a non-deliverable option with crypto merchant bank Galaxy Digital, according to the firms, with the move marking Goldman's push further into the nascent market for derivatives tied to digital assets.
The market for instruments offering derivative exposure to bitcoin is largely controlled by crypto-native companies including Galaxy, Genesis and GSR Markets.
Goldman and Galaxy said hedge funds are looking for derivative exposure to bitcoin, either to make bets on the cryptocurrency's price without directly owning it or to hedge existing exposure to it.
The firms told CNBC compared with the exchange-based CME Group bitcoin products that Goldman began trading last year, Goldman is taking on greater risk by acting as a principal in the transactions.
"This trade represents the first step that banks have taken to offer direct, customizable exposures to the crypto market on behalf of their clients," Damien Vanderwilt, head of global markets at Galaxy Digital, told CNBC in an interview. Galaxy was founded by former Goldman Sachs partner Michael Novogratz.
The options trades are "much more systematically relevant to markets compared to cleared futures or other exchange-based products," Vanderwilt said. "At a high-level, that's because of the implications of the risk banks are taking on; they're implying their trust in crypto's maturity to date."
The embrace of bitcoin by Goldman and other major financial institutions has helped build the growth of the digital coin and the broader cryptocurrency market. The crypto market last year jumped to a valuation of more than $3 trillion before paring the gain to $1.9 trillion as of Monday. Bitcoin reached an all-time high above $65,000 last year.
Bitcoin so far this year has declined by 12% following its 60% spike up in 2021. It traded near $41,000 on Monday.
Contributer : Business Insider https://ift.tt/NXhwdO0
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Tuesday, March 22, 2022
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