- Goldman Sachs is now offering Bitcoin non-deliverable forwards to institutional investors.
- To reduce its risks, the global investment bank is buying and selling Bitcoin futures in block trades on CME.
- The Wall Street giant quietly started to offer crypto derivatives to clients last month.
Goldman Sachs has reportedly been providing institutional investors a way to place bets on Bitcoin price with a new derivatives offering.
Goldman Sachs focuses on expanding Bitcoin offerings
Last month, the investment banking giant began offering trading with non-deliverable forwards, a derivative tied to the Bitcoin price. These derivatives are contracts between two parties that agree to settle the difference between the spot price and the contracted price at a specific date.
The contracts pay in cash, and Goldman clients would be able to speculate on the Bitcoin price. On the other hand, the global investment bank with over $2 trillion in assets under management will protect itself by buying Bitcoin futures in block trades on the Chicago Mercantile Exchange (CME) using Cumberland DRW as its trading partner.
Max Minton, Goldman’s Asia-Pacific head of digital assets, said:
Institutional demand continues to grow significantly in this space, and being able to work with partners like Cumberland will help us expand our capabilities.
Minton added that the new offering paves the firm’s way to evolve its nascent cash-settled cryptocurrency capabilities. Goldman Sachs’ partnership with Cumberland also shows the eagerness to work with external firms to increase the bank’s capacity to help large investors take positions with the non-deliverable forwards, according to sources familiar with the matter.
Goldman Sachs restarted its trading desk this year to help clients deal in publicly traded futures related to Bitcoin. The Wall Street giant also recently started to offer its wealthiest clients access to a range of investments in the leading cryptocurrency.
As Bitcoin derivatives are settled in cash, the latest offering does not require Goldman Sachs to deal with physical BTC. Similar to the Morgan Stanley and JPMorgan trusts, the goal is to provide customers access to products that track the volatility of the pioneer cryptocurrency’s price.
Goldman’s entrance into the crypto space is a sign of how the industry is maturing, said Justin Chow, global head of business development for Cumberland DRW. He added:
Goldman Sachs serves as a bellwether of how sophisticated, institutional investors' approach shifts in the market. We’ve seen rapid adoption and interest in crypto from more traditional financial firms this year.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.