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The decision by Goldman Sachs to deal with ETPs comes following a recent survey that involved over 150 family offices that the bank does business with.
Goldman Sachs is now settling and clearing crypto-linked Exchange Traded Products (ETPs) for its European hedge fund clients. It has been revealed by sources familiar with the matter.
The bank’s prime brokerage unit is initially only offering the service to an exclusive group of clients, reveal the sources. The bank’s possibility of rolling out the service to a broader client pool is still under review.
ETPs track the performance of investments like stocks, bonds and currencies. Crypto ETPs enable clients to invest in crypto without trading in the cryptocurrency associated with them. As the name suggests, they are traded on an exchange like the better known Exchange Traded Funds (ETFs). They have recently been gaining popularity.
ETC Group, the self-proclaimed “bridge between crypto and regulated markets” introduced the first Bitcoin ETP in the United Kingdom on the Aquis Exchange of London. Other exchanges, such as Switzerland’s SIX Exchange and Germany’s Deutsche Boerse have seen a rising number of crypto ETPs being listed.
The adoption of cryptocurrencies by major financial institutions does not stop there. The Bank of America earlier this week revealed that it would be clearing and settling crypto ETPs for hedge funds. This, after last week’s announcement that they would be trading Bitcoin features for select client’s and had started clearing cash-settled contracts. Also, BNY Mellon announced this week that it was joining State Street and four other banks in backing crypto trading platform Pure Digital.
Global Head of Foreign Exchange at the bank Jason Vitale had this to say:
“Digital assets are only going to become more embedded in global markets in the years ahead, and this collaboration accords with BNY Mellon’s wider strategy to develop a digital asset capability for clients across the entire trade life cycle.”
The decision by Goldman Sachs to deal with ETPs comes following a recent survey that involved over 150 family offices that the bank does business with. According to the survey, 15 percent revealed that they had already invested in crypto. 45 percent of respondents said they would consider investing in crypto as a hedge against “higher inflation, prolonged low rates, and other macroeconomic developments following a year of unprecedented global monetary and fiscal stimulus.”
Meana Flynn, Global Co-Head of Goldman Sachs Private Wealth Management said that a large number of family offices wanted to consult with the bank on ‘blockchain and digital ledger technology’. She revealed that some believed, from a purely efficiency and productivity point of view, that blockchain technology would be as impactful as the internet has been.