According to a recent report, Goldman Sachs is on the approach of becoming the first major U.S. bank to trade an over-the-counter (OTC) crypto asset, the company traded a Bitcoin-linked instrument with crypto bank Galaxy Digital.
An OTC transaction is one that occurs directly through a private broker-dealer network rather than through a centralized exchange. With cryptocurrency, it might be a big channel for corporations to create more derivative products.
Goldman’s transaction is a significant step forward in the evolution of institutional crypto investing. Goldman Sachs will take on more risk with OTC trading because it will be directly involved in the transaction, as opposed to the exchange-based BTC products that Goldman now offers.
In comparison to other exchange-linked derivatives already offered by Galaxy, Galaxy stated the OTC option trade was far more relevant to markets. OTC crypto goods, if they are offered as a product, will most likely be directed at institutional investors like investment banks and hedge funds. Galaxy already provides some cryptocurrency derivatives, which Goldman Sachs has lately begun to offer to interested clients.
Specifically, Goldman allowed its clients to get exposure to a Galaxy Ethereum fund. Last year, the crypto bank started providing liquidity to Goldman Sachs for its Bitcoin futures trading.
Crypto derivatives are sought after by investors who want to obtain exposure to the market without participating directly in them. According to CNBC, the market for these securities is dominated by major crypto firms such as Galaxy, Genesis, and GSR Markets. Goldman Sachs is now considering launching a cryptocurrency options market.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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