Daily Management Review

Bitcoin Derivatives To Be Offered To Its Investors By Goldman Sachs: Bloomberg News


05/10/2021




Bitcoin Derivatives To Be Offered To Its Investors By Goldman Sachs: Bloomberg News
According to a recently published report in Bloomberg News, trading with a derivative tied to bitcoin prices for Wall Street investors will be allowed from now on by Goldman Sachs Group Inc.
 
The report said the trading with non-deliverable forwards that eventually pay out in cash has been opened up by the bank which is the fifth largest lender of the United States.  
 
As a precautionary measure and to protect itself from the volatility of crypto currencies, the bank plans to buy and sell Bitcoin futures in block trades on CME Group, the report said and added that Goldman also plans to use Cumberland DRW as its trading partner.
 
There were no comments available from Goldman.
 
Earlier this year, its own crypto currency trading desk was restarted by this Wall Street bank as the company was also reported to be planning to start dealing in bitcoin futures and non-deliverable forwards on behalf of its clients.
 
In the last few months there has been greater and wider acceptance of bitcoin by companies and institutions in the mainstream business arena. For example, there was a report by CNBC earlier this year which claimed that Morgan Stanley was the first of the of banks of the United States that started to offer its wealth management clients access to bitcoin funds in March.
 
And according to a report last month published by CoinDesk, there are also plans of JPMorgan Chase & Co to allow some of its selected clients to make investments in an actively managed bitcoin fund, which will the first time for the Wall Street bank.
 
Despite still not being active in the Bitcoin spot market, Goldman introduced the wagers to clients last month without an announcement.
 
“Institutional demand continues to grow significantly in this space, and being able to work with partners like Cumberland will help us expand our capabilities,” said Max Minton, Goldman’s Asia-Pacific head of digital assets. The new offering is “paving the way for us to evolve our nascent cash-settled crypto-currency capabilities.”
 
In march Goldman Sachs had also said that it was preparing to soon offer offering private wealth clients additional vehicles to bet on crypto prices for its private wealth clients. However the bank now will be able to dramatically increase its capacity to help big investors take positions with its push into forwards. The willingness of the bank to work with outside firms to help it to do so is underscored by its plans to partner with Cumberland.
 
Since it was created in 2009, bitcoin has been shunned by Wall Street banks. At one point in time, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon even threatened to take severe action against any of the bank’s trader if they were found to be buying and selling the digital currency.
 
However their view point about bitcoin of many bankers have changed with growing interest of their clients in the crypto currency as well as the astronomical rise in the value of biotin in recent months with the crypto currency’s value reaching a high of almost $65,000 in April.
 
“Goldman Sachs serves as a bellwether of how sophisticated, institutional investors approach shifts in the market,” said Justin Chow, global head of business development for Cumberland DRW. “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.”
 
(Source:www.reuters.com & www.bloomberg.com)