By
Chimamanda U. Martha
April 26th, 2024
Amid the recent approval of the spot Bitcoin ETFs, institutional clients of Goldman Sachs have been seeking exposure to cryptocurrency derivative products.
Not only retail traders but also hedge fund clients of Goldman Sachs are re-entering the cryptocurrency markets. According to Max Minton, Goldman’s Asia Pacific head of digital assets, the recent approval of ETFs has sparked renewed interest and activity among their clients. Minton stated in an interview:
“Many of our largest clients are active or considering becoming active in the cryptocurrency space.”
Goldman Sachs, which established its crypto trading desk in 2021, currently offers cash-settled Bitcoin and Ether option trading, along with CME-listed Bitcoin and Ether futures. However, the firm does not engage in trading the underlying cryptocurrency tokens themselves.
Minton added:
“It was a quieter year last year, but we’ve seen a pickup in interest from clients in onboarding, pipeline, and volume since the start of the year”.
The primary demand originates from Goldman’s current clientele, predominantly traditional hedge funds. Additionally, the institution is broadening its reach to include a more diverse range of clients such as asset managers, bank clients, and specific digital asset firms, noted the bank’s representative.
These clients are utilizing crypto derivatives for various purposes, including directional bets, yield enhancement, and hedging strategies. While Bitcoin-related products continue to attract the majority of clients’ attention, the representative noted that interest in Ether-related products may evolve, particularly contingent on the approval of Ether ETFs in the United States.
Tokenization of Assets
In addition to trading activities, Goldman Sachs is engaged in the tokenization of conventional assets through blockchain technology. The bank introduced a digital asset platform named GS DAP and recently engaged in a pilot program on a blockchain network linking banks, asset managers, and exchanges.
Goldman Sachs is not the only financial giant to explore asset tokenization. Last week itself, asset management giant BlackRock unveiled its tokenized fund BUIDL launched atop the public blockchain network Ethereum. The BlackRock USD Institutional Digital Liquidity Fund (BUIDL) is a tokenized fund designed to offer investors a secure, transparent, and efficient investment opportunity
Goldman Sachs has also directed venture investments towards startups aligned with its vision and the advancement of the digital asset market structure, particularly focusing on blockchain infrastructure companies.
“We maintain a portfolio and will invest opportunistically when it aligns with our strategic objectives,” Max Minton affirmed.