Goldman Sachs (GS) Conducts First OTC Crypto Transaction With Galaxy Digital

Goldman Sachs (NYSE: GS) is the first major U.S. bank to carry out an over-the-counter (OTC) crypto trade.

The Wall Street banking giant traded an instrument linked to Bitcoin (BTC), known as a non-deliverable option, with Galaxy Digital, the crypto merchant bank founded by Mike Novogratz.

The imminent trade is viewed as a significant milestone for crypto adoption among institutional investors.

"We are pleased to continue to strengthen our relationship with Goldman and expect the transaction to open the door for other banks considering OTC as a conduit for trading digital assets," said Damien Vanderwilt, Co-President, and Head of Global Markets at Galaxy Digital.

"Goldman's continuing trust in us is a testament to Galaxy's expertise and ability to meet the evolving demands by institutions as crypto solidifies itself as the fifth asset class."

Galaxy Digital co-president Damien Vanderwilt said the move by Goldman indicates the growing maturity of crypto assets for institutional investors.

“This trade represents the first step that banks have taken to offer direct, customizable exposures to the crypto market on behalf of their clients,” added Vanderwilt.

He added that options trades are far “more systematically relevant to markets compared to cleared futures or other exchange-based products.”

“At a high-level, that’s because of the implications of the risk banks are taking on; they’re implying their trust in crypto’s maturity to date.”

Big money managers have been looking to increase their derivative exposure to Bitcoin by either betting on the cryptocurrency without directly owning it or hedging existing exposure to BTC.

Crypto firms such as Galaxy, GSR Markets, and Genesis are the ones that control the market for such instruments.

“We are pleased to have executed our first cash-settled cryptocurrency options trade with Galaxy,” said Max Minton, Goldman’s Asia Pacific head of digital assets.

“This is an important development in our digital assets capabilities and for the broader evolution of the asset class.”

Last year, Goldman Sachs announced it has started trading exchange-based CME Group Bitcoin products, however, this time the bank will adopt a larger role and serve as a principal in the OTC transactions.

By Senad Karaahmetovic

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