(Bloomberg)-Goldman Sachs Group, Inc. has carried out its first over-the-counter crypto options trading, a further step in expanding its digital asset offerings to Wall Street investors.
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The bank said in a statement that it had traded a non-deliverable Bitcoin option, a derivative associated with the price of Bitcoin paid in cash. The transaction was facilitated by Galaxy Digital Holdings Limited, a crypto financial services company founded by former Goldman partner Michael Novogratz. Options are used by crypto investors to hedge risks and raise yields, and over-the-counter transactions are usually larger transactions that are negotiated personally.
According to Galaxy, the move is the first such transaction by a major US bank. Damian Vanderwirt, co-president of Galaxy and head of global markets, predicted in a statement that the deal would “open the door to other banks that see OTC as a conduit for digital asset trading.” There is.
For many years since it was created in 2009, Bitcoin has been shunned by Wall Street banks. Large banks are plagued by regulatory uncertainty and “knowing customers” rules and are not yet active in the crypto spot market. However, some banks, including Goldman, are looking for more crypto derivatives transactions, Bloomberg News reports.
“Given today’s crypto, part of the sector’s concern is that most of the players in the sector aren’t familiar with regulators and politicians,” Vanderwirt said in an interview. “It helps regulators and governments understand that companies like Goldman, who have known and trusted for decades, will also participate.”
Last year, Goldman launched a non-deliverable forward transaction, a derivative associated with the price of Bitcoin settled in cash. We also offer exchange-listed options and futures trading on Bitcoin and Ether. Galaxy also provided liquidity to Goldman’s first CME Bitcoin futures contract last year.
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Max Minton, Goldman’s Head of Digital Assets for the Asia Pacific Region, said:
Explainer: How Derivatives Strengthen the Already Headache Cryptographic Market: QuickTake
(Galaxy details, updated with quotes from executives in the fifth paragraph.)
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