Goldman Sachs begins trading derivative product linked to ETH

Bloomberg reported that Goldman Sachs has begun trading a kind of derivative linked to the price of Ethereum (ETH).

Derivative product linked to ETH

The bank initiated a derivative product related to the price of ether amidst a chaotic scenario in crypto.

The prospect of an ETH-linked derivative was first suggested by the company in June 2021. And this is Goldman’s first over-the-counter (OTC) no-delivery (NDF) digital asset trade in ETH.

According to Bloomberg, the deal was organized by Marex Solutions, the hedge and investment solutions division of Marex.

An NDF is a derivative contract that allows the holder to gain exposure to an asset without actually owning it. It is paid in cash at the time of settlement and depends on the price of ETH.

Goldman’s action demonstrates strong institutional interest in digital currencies at a delicate time of market downturn.

Banks and other prominent financial organizations are forming internal cryptocurrency working groups.

Auditors and escrow providers, for example, are already providing crypto services and are looking to expand. Likewise, large traditional payment companies also remain upbeat despite the downturn.

This year, Visa’s cryptocurrency-linked credit card usage, for example, was $2.5 billion.

Now, the biggest challenge facing the digital asset industry is regulatory security. This would imply less compliance risks and concerns and even more adoption from other industries.

In the US, the Securities and Exchange Commission, the SEC, may be interested in regulating digital asset trading platforms. That’s because SEC chief Gary Gensler stated that the assets are similar to regular bonds. Therefore, they must follow the same laws.

Meanwhile, the UK Financial Authority also indicated that regulation of the sector will be strengthened.

European politicians have just passed a bill for digital currencies. This bill will make all anonymous crypto transactions illegal.

But industry players fear this move will undermine privacy and innovation.