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Goldman Sachs will allow its clients to access non-deliverable forwards (NDFs) tied to BTC. Note that the derivative product doesn’t deal with physical BTC since all the settlement happens in cash.
On Thursday, May 6, Wall Street banking giant Goldman Sachs Group Inc (NYSE: GS) announced that it’s all set to offer Bitcoin derivative products to its customers. The company already spoke about its intention to offer crypto investment options to its wealth management clients.
Goldman Sachs Bitcoin Derivative Product
As per the announcement by Bloomberg, Goldman Sachs will allow investors to access non-deliverable forwards (NDFs), this is nothing but a derivative tied to Bitcoin price and pays out in cash. Besides, Goldman also protects itself from Bitcoin’s price volatility by buying and selling the CME Bitcoin futures in block trades. For this, Goldman is working with its trading partner Cumberland DRW. Speaking to Bloomberg, Max Minton, Goldman’s Asia-Pacific head of digital assets said:
“Institutional demand continues to grow significantly in this space, and being able to work with partners like Cumberland will help us expand our capabilities. The new offering is “paving the way for us to evolve our nascent cash-settled crypto-currency capabilities.”
Offering NDFs bolsters Goldman’s ability to take big investors to take positions. Also, Goldman’s partnership with Cumberland speaks of the bank’s willingness to work with outside firms.
Banking Institutions Warming Up to Bitcoin (BTC)
Having criticized Bitcoin (BTC) for several years, it seems the fears of the traditional banking institutions are clear with BTC’s indomitable rise. As the saying goes, “if you can’t beat them, join them” is apparent with the recent approach of banks.
Banking institutions have understood that Bitcoin is going nowhere! Citing massive customer demand, giants like Goldman Sachs, Morgan Stanley (NYSE: MS), and JPMorgan Chase & Co (NYSE: JPM) have now warmed to Bitcoin. Thus, they are now working on Bitcoin and crypto derivative products for their clients. Also praising Goldman for its recent decision, Justin Chow, global head of business development for Cumberland DRW said:
“Goldman Sachs serves as a bellwether of how sophisticated, institutional investors approach shifts in the market. We’ve seen rapid adoption and interest in crypto from more traditional financial firms this year, and Goldman’s entrance into the space is yet another sign of how it’s maturing.”
As Goldman Sachs dabbles into Bitcoin (BTC), it takes care of the regulatory matters as well. The Bitcoin derivative product from Goldman doesn’t require dealing with physical BTC since the settlement is in cash. A person familiar with the matter said that Goldman Sachs might offer exchange-traded notes to its hedge fund clients.