Goldman Sachs is trading bitcoin futures through Galaxy Digital.
This was revealed by CNBC, saying that Goldman Sachs aims to help hedge funds and large institutional clients to bet on bitcoin.
For this reason, the bank has started trading bitcoin futures by leaning on the crypto company founded by Mike Novogratz. This is the first time Goldman Sachs has used a digital asset firm as a counterparty since it set up its crypto desk last month.
Current banking regulations do not allow banks to handle BTC directly, which is why an intermediary was chosen, similar to how they operate in commodity markets, for example.
Moreover, many of Galaxy Digital’s executives come from Goldman Sachs.
Goldman Sachs paves the way for banks and Bitcoin futures
Galaxy’s co-chairman, and former Goldman partner, Damien Vanderwilt said that since this is the first major US bank to trade cryptocurrencies, it could lead the way for other giants to do so.
“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”.
Goldman also said that it will be looking for other liquidity providers to trade bitcoin futures contracts.
Goldman’s head of digital assets for the Asia-Pacific region, Max Minton, said:
“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”.
Vanderwilt also added that the more banks allow their clients to trade bitcoin, the more they will improve the depth and breadth of this market, eventually perhaps even reducing its volatility.
The curious thing is that several senior executives at Goldman Sachs are still sceptical about bitcoin, but as the bank’s clients demand financial instruments to invest in this market, the bank is actually compelled to offer them.
Vanderwilt also revealed that in 2017, as a senior sales executive at Goldman, he was tasked with helping kick off the bank’s first concrete effort to enter the bitcoin futures market, but that plan was later shelved. Now he’s basically doing the same thing as co-chairman of Galaxy.
In this regard he stated:
“There’s a lot of irony, I smile about it a lot. But I’m really happy, it’s a happy full circle”.