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Goldman Sachs considering derivative products in crypto

Goldman Sachs is considering integrating crypto-based derivative instruments into its offering.

Goldman Sachs will expand its offering with derivative investment instruments with underlying crypto

crypto bitcoin derivative assets
New derivative instruments with crypto underlying would bring greater liquidity to the system

According to press rumours, the American investment bank, Goldman Sachs, is in talks with the cryptocurrency exchange FTX to promote new derivative investment products in cryptocurrencies to its customers. 

According to reports in the Financial Times, the CEOs of the two companies recently held a closed-door meeting in which they discussed the possibility of a partnership between the two companies in order to bring FTX’s derivative products into compliance with US Commodity Futures Trading Commission (CFTC) standards.

In addition, according to the City’s financial newspaper, the two would also discuss the possibility of bringing FTX to listing on the Nasdaq, as Goldman Sachs did a year ago with Coinbase

Recently in a round C financing, FTX raised $400 million, resulting in a total valuation of over $30 billion, with $10 billion daily trading volumes and over 1 million users.

The Bahamas-based exchange recently asked the CFTC to change a rule requiring it to use brokers to secure all of its derivatives transactions. It is very likely that this was also discussed at the meeting and how this could be achieved, with the advice of the US banking giant, which is currently acting as an intermediary for FTX.

The close collaboration between Goldman Sachs and FTX

Brett Harrison, President of FTX’s US subsidiary, said in an interview with Barron’s:

“We have multiple FCMs already committed to integrating technologically with the exchange. There are several large ones you can probably name”.

A collaboration of this kind between Goldman and FTX would likely be a big signal of change in the assessment of the crypto world by traditional finance

Many investment banks are radically revising their opinion on cryptocurrencies, which until two years ago were described as little more than a scam with no intrinsic value.

During a call with investors in 2020, Goldman had stated about digital assets: 

“We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients”.

Now, however, according to sources close to the bank, this deal with FTX would give the bank the opportunity to offer direct futures trading, customer introductions and a ramp function, or the provision of capital top-ups for customers.

Recently, FTX CEO Sam Bankman-Fried attended a hearing of the chairman of the CFTC at the Senate Agriculture Committee, where the committee called for more powers to regulate cryptocurrency markets to prevent fraud and protect consumers

The CEO of FTX himself, as well as many other players in the crypto world, have long been calling on the authorities for clear regulation of the sector, which would primarily benefit the market players themselves.

Vincenzo Cacioppoli
Vincenzo Cacioppoli
Vincenzo was born in Genova but lived most of his life in Milan. He has a degree in political science. He is a journalist, blogger, writer, and marketing and digital advertising expert. After a long experience in traditional marketing, he started working with the web and digital advertising in 2011, creating a company called Le enfants. Passionate about the web and innovation, in 2018 he started exploring the topics related to blockchain technology and cryptocurrencies. Independent cryptocurrency trader since March 2018, he now collaborates with companies in the sector as a content marketing specialist. In his blog. mediateccando.blogspot.com, he has long been primarily focused on blockchain, which he considers to be the greatest technological innovation after the Internet. His first book about blockchain and fintech is scheduled for release in November.