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Goldman Sachs first major bank to trade crypto over-the-counter

Goldman Sachs have become the first major US bank to trade crypto over-the-counter. The bank traded a non-deliverable Bitcoin option with Galaxy Digital, the crypto investment firm founded by Mike Novogratz. The option is a derivative anchored to Bitcoin’s price which pays out in cash.  

“We are pleased to have executed our first cash-settled cryptocurrency options trade with Galaxy,” said Max Minton, Asia Pacific head of digital assets at Goldman Sachs. He added that the move marks an “important development in our digital assets capabilities and for the broader evolution of the asset class."

While Goldman have been trading Bitcoin futures with Galaxy Digital for nearly a year now, the products to date have been exchange-based CME securities. The difference with the move this week is that Goldman will be acting as the principal in the trade, meaning the bank absorbs significantly more risk than exchange products.

Co-President and Head of Global Markets at Galaxy, Damien Vanderwilt, said he expects  that “the transaction to open the door for other banks considering OTC as a conduit for trading digital assets” and that "Goldman's continuing trust in us is a testament to Galaxy's expertise and ability to meet the evolving demands by institutions as crypto solidifies itself as the fifth asset class."

With the ownership of risk now residing firmly on the steps of Wall Street, it amounts to the latest step by crypto into the mainstream. Goldman are implicitly legitimising crypto as an asset class, as opposed to exchange based products, which allow access to crypto but keep the bank’s risk at arm’s length. Clients of Goldman can now directly access Bitcoin through the bank – a move which has been a long time coming.

With one major US bank now committing, the next development may be copycats. Eyes will be cast towards other banks who may now make the same jump, given demand from clients for crypto access has been growing to a crescendo over the last couple of years. This clamour will no doubt louden now that clients can point towards Goldman as an example.

As for impact on the crypto space as a whole, this may be more notable than the move into exchange based products last summer. With Goldman now directly exposed, the systemic knock-on effects will likely be stronger than we say with CME products – especially if other banks follow.

The hope from enthusiasts is that as further advances such as this announcement continue to be made by crypto, the notorious volatility of Bitcoin will come down, helping to solidify it as a reputable store of value.

The ultimate signal of legitimacy for many, of course, remains the day when Wall Street banks dive into spot trading. While this announcement with Galaxy is an important step, the major banks remain uninitiated with the spot market, given continued regulatory barriers and KYC hurdles.

After today, perhaps we are a little closer.


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