Goldman Sachs Group Inc. is exploring offering over-the-counter bilateral crypto options, signaling the bank’s deepening participation in helping institutions trade digital-currency derivatives. The Goldman Sachs Group, Inc. is an American multinational investment bank and financial services company headquartered in New York City. Goldman Sachs offers services in investment banking, securities underwriting, asset management and investment management, and prime brokerage.
The powerhouse investment bank is among a few Wall Street banks at the early stage of exploring such offerings, according to people with knowledge of the matter, asking not to be identified discussing private information. The so-called bilateral options allow trades to be customized so that crypto holders such as hedge funds and Bitcoin miners can hedge risks or boost yields.
The market for these options, still in its infancy, has been dominated by crypto-native firms such as Genesis Global Trading Inc., Galaxy Digital Holdings Ltd., and GSR. Traditional trading giant DRW Holdings LLC has also jumped in as a liquidity provider.
Large Wall Street banks still aren’t active in the crypto spot market, handicapped by regulatory uncertainty, internal compliance procedures and “know your customer” rules. Goldman is offering options and futures trading in Bitcoin and Ether. Last year, it opened up trading of non-deliverable forwards, a derivative tied to Bitcoin’s price that pays out in cash.
Recently, the bank has seen a demand for derivative-type hedging. However the market for these options contracts are available but are currently dominated by crypto-native companies. Back in January, a former Goldman CEO was quoted as saying that crypto is definitely “happening” even if he doesn’t fully understand it yet. In another attempt at getting into crypto, back in July 2021, the bank filed for a “DeFi” ETF that would closely track the performance of the decentralized finance space.
