Goldman Sachs for the first time ever conducted an over-the-counter crypto transaction with crypto financial services company Galaxy Digital Holdings Ltd (TSX: GLXY), as the US bank makes a step into the derivatives market for virtual assets.
Galaxy Digital on Monday announced that its trading unit executed an OTC trade of a non-deliverable Bitcoin option with Goldman Sachs, marking a significant milestone for institutional investors’ expansion into cryptocurrency markets. “This trade represents the first step that banks have taken to offer direct, customizable exposures to the crypto market on behalf of their clients,” said Galaxy co-president Damien Vanderwilt, as cited by CNBC.
According to Vanderwilt, the move is expected to “open the door for other banks considering OTC as a conduit for trading digital assets.” Traditionally, digital assets were not viewed favourably by Wall Street, largely due to unclear regulations and “know your customer” etiquette; Goldman, however, has been making a greater presence in crypto derivates trading, even if it means taking on a larger risk by acting as a principal in the transactions.
Major hedge funds have been looking to gain exposure to bitcoin via derivatives, whether it means making wagers on the cryptocurrency’s price, or by hedging existing exposure to it. Goldman acknowledged the demand for options trading of digital assets has been rising. “The next big step that we are envisioning is the development of options markets,” said the bank’s global head of crypto trading Andrei Kazantsev back in December.
Galaxy Digital last traded at $19.98 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.