Cryptocurrency adoption is slowly entering the banking sector, and Goldman Sachs is one of the leading banks venturing into the market. The investment bank is now offering Bitcoin derivatives to its investors.
Goldman Sachs offers Bitcoin-related products
Goldman Sachs, one of the leading investment banks in the United States, has begun offering its investors access to non-deliverable forwards (NDFs). This is a derivative tied to the price of the leading cryptocurrency and pays out in cash.
Bloomberg reported that the bank is protecting itself from Bitcoin’s volatility by purchasing and selling BTC futures in block trades on CME Group. Goldman Sachs is conducting the transactions with the help of Cumberland DRW serving as its trading partner. The report added that Goldman Sachs is yet to be active in the spot market but began offering the wagers to clients last month.
Max Minton, Goldman’s Asia-Pacific head of digital assets, told Bloomberg that “Institutional demand continues to grow significantly in this space, and being able to work with partners like Cumberland will help us expand our capabilities. The new offering is paving the way for us to evolve our nascent cash-settled crypto-currency capabilities.”
Goldman Sachs is starting to get more involved in the cryptocurrency space following years of traditional banks ignoring the industry. In March, the bank announced that it would offer its wealthy clients access to Bitcoin investment vehicles in the current quarter. The entry into the forwards market has increased its position to help big investors take positions.
Justin Chow, global head of business development for Cumberland DRW, said, “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, and Goldman’s entrance into the space is yet another sign of how it’s maturing.”
Traditional banks starting to get involved in crypto
Although the traditional banks are not taking major positions in the spot market yet, they are offering crypto-related products. Goldman Sachs is leading the way in this effort. The bank recently led a $15 million funding round for Coin Metrics, becoming one of the leading investors in the company.
Other leading US investment banks such as Morgan Stanley and JPMorgan are also entering the market and providing their investors with access to crypto-related products.
