One of the largest financial institutions in the world is discovering new ways to receive exposure to the cryptocurrency market
According to the CNBC article, Goldman Sachs has completed its first OTC cryptocurrency transaction. One of the largest banks in the country has traded non-deliverable options linked to Bitcoin with Galaxy Digital.
A transaction is considered as an enormous step toward further adoption of cryptocurrencies as a type of asset by large institutions like Goldman.
The company has traded in crypto-related assets before, such as CME Group’s Bitcoin products, but in this case it acted as a principal in the transaction. According to Galaxy Digital Co-Chairman Damien Vanderwilt, OTC trading represents the first step the bank has taken to provide customizable exposure to the crypto market.
The choice of trading options rather than other products was justified, with systematic relevance of the product to the cryptocurrency market in comparison to cleared futures or any other exchange-based products.
Following a massive bullrun in 2021, when Bitcoin gained over 150% of its value at one point, institutions began looking for ways to gain exposure to cryptocurrency or exchange products related to bitcoin.
Goldman representatives have also shared their excitement in working with cash-settled cryptocurrency options. The company’s head of digital assets in Asia Pacific believes that it is an important development in Goldman’s digital assets capabilities and the evolution of the asset class.
As Goldman’s global head of crypto Andrei Kazantsev noted in December, their next big step would be the development of options markets.
Despite the major correction of Bitcoin and the cryptocurrency market in general, institutions have not left or abandoned the market completely and are still accumulating more funds on their balance sheets.
Wall Street giant Goldman Sachs conducts OTC crypto transfer with Galaxy Digital
According to a few reports and a press release, Wall Street giant Goldman Sachs (NYSE:GS) entered into an over-the-counter (OTC) cryptocurrency exchange with Galaxy Digital, a crypto company founded by Mike Novogratz in January. 2018. Both the firms call the transfer a “first-of-its-kind transaction by a major U.S. bank.”
Essentially, Goldman Sachs Group Inc. bank executed the first OTC crypto transaction in the form of a bitcoin non-deliverable option (NDO). Goldman Sachs and Galaxy clarified in the announcement that the two companies have an ongoing partnership. Galaxy notes that the OTC settlement is a “continuation of the bank’s partnership with Galaxy Digital to deepen its crypto capabilities.”
Goldman Sachs has had an interesting relationship with cryptocurrencies and blockchain technology over the years. In January, former Goldman Sachs CEO Lloyd Blankfein said his views on cryptocurrency were changing. Shortly after Blankfein’s comment, analysts at Goldman Sachs warned that bitcoin (BTC) was sensitive to interest rate hikes from the Federal Reserve.
