Goldman Sachs Takes Significant Step Toward Offering Over-the-Counter Bitcoin Options Trading

Goldman Sachs Takes Significant Measure in Offering Over-the-Counter Bitcoin Options Trading.

American multinational investment bank Goldman Sachs has announced the completion of its first-ever over-the-counter (OTC) cryptocurrency options trade, in a bid to offer crypto assets to institutional investors, CNBC reported today. 

In a transaction facilitated by Galaxy Digital, Goldman Sachs traded a non-deliverable option, a crypto derivative tied to the price of Bitcoin (BTC), which pays out in fiat. 

The move is considered a milestone as it marks the first time a U.S. major bank will be conducting an OTC cryptocurrency option trade. 

Damien Vanderwilt, co-president and head of global markets at Galaxy Digital, said he hopes the trade execution gives the green light to other traditional financial institutions considering delving into the digital currency space using the OTC method.  

According to Vanderwilt, Goldman Sachs’ involvement in the trade goes to show the maturity of cryptocurrency assets for institutional investors, including hedge funds.  

“This trade represents the first step that banks have taken to offer direct, customizable exposure to the crypto market on behalf of their clients,” Vanderwilt added. 

Goldman Takes on More Responsibility

The new OTC cryptocurrency options will be different from the exchange-based CME Group bitcoin product Goldman Sachs started trading last year, as the latter does not carry more risk than the former. 

With over-the-counter cryptocurrency options trading, Goldman Sachs will take on more risks as the bank will act as a principal in all transactions. 

Banks Make U-turn Commence Bitcoin Adoption

Launched in 2009, Bitcoin has been largely ignored by institutional investors and traditional financial institutions on the grounds that there is no clear regulation for the asset class. 

However, the issue of regularity clarity is expected to be addressed very soon, especially now that the president of the United States, Joe Biden, has mandated all federal agencies to collaborate and establish laws that will foster the growth of the industry while protecting customers from the risks associated with the asset class. 

Despite the lack of regulatory clarity in the industry, a handful of traditional financial institutions, including BNY Mellon and Goldman, have made significant moves in the market by offering crypto-related services to their clients. 

Goldman, which launched an exchange-based CME bitcoin product last year, said a majority of its clients demanded options linked to cryptocurrencies toward the end of last year, hence the recent development. 

“This is an important development in our digital assets capabilities and for the broader evolution of the asset class,” Max Minton, Goldman’s Asia Pacific head of digital assets, said.  

Meanwhile, Goldman Sachs also joined other Bitcoin proponents to predict that the asset class will hit $100,000 by the year end.