Goldman Sachs, the Wall Street giant, has just become the first major US bank to conduct an over-the-counter (OTC) cryptocurrency transaction.
As CNBC learns, the bank traded a BTC-linked instrument called a “non-deliverable option” with New York-based commercial cryptocurrency bank Galaxy Digital.
Over-the-counter (OTC) trading is a business that takes place directly between two interested parties. That is, there is no supervision of stock exchanges in the business.
The initiative is a milestone for both the traditional market and the crypto market as well as institutional investment.
Furthermore, Goldman Sachs’ involvement signals a maturing of the cryptocurrency sector. This is what Galaxy co-president Damien Vanderwilt said:
“This trade represents the first step that banks have taken to offer direct and customizable exposures to the cryptocurrency market on behalf of their clients,” Vanderwilt said in an interview with CNBC.
Expansion of the crypto market
Last year, Goldman began trading CME Group BTC products. However, according to companies, this current initiative shows that the bank is assuming greater risk by acting as the main agent in transactions.
According to Vanderwilt, options trading is “much more systematically relevant to markets compared to offset futures or other exchange-based products.”
“At a high level, this is because of the implications of the risk that banks are taking. They are hinting at their confidence in the maturity of the cryptocurrency to date.”
In a statement, Goldman’s head of Asia-Pacific digital assets Max Minton noted that the company is pleased to have executed its first cash-settled cryptocurrency options trade with Galaxy.
“This is an important development in our digital asset capabilities and for the broader evolution of the asset class.”
Galaxy’s trading platform provides liquidity across 100+ digital assets. In addition, it works with over 690 institutional trading counterparties. In the third quarter of last year alone, the company added 43 new relationships.