Goldman Sachs Makes First OTC Crypto Trade on the Derivatives Market

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In Brief
  • Goldman Sachs has made its first over-the-counter crypto options trade.

  • Galaxy has called it the first instance of OTC crypto trade by a major bank.

  • Galaxy was also involved in facilitating Goldman's first CME Group bitcoin futures transaction last year.

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Goldman Sachs has made the first-ever over-the-counter crypto trade by a major U.S. bank.

This means the banking giant used an over-the-counter market for a private transaction, instead of trading over an exchange for the first time.

The deal was conducted with the digital-asset financial company Galaxy Digital. 

The transaction was described in the statement as a bitcoin non-deliverable option, a type of cash-settled cryptocurrency options trade. 

Damien Vanderwilt, co-president and head of global markets at Galaxy, said in an interview that the trade will “open the door for other banks considering OTC as a conduit for trading digital assets.”

Greater institutional adoption incoming?

The trade is considered an important development as it signals the start of the institutional acceptance of bitcoin as an asset class. Max Minton, Goldman’s Asia Pacific head of digital assets, has called it an important development for digital assets capabilities and the broader evolution of the crypto ecosystem.

Goldman was an early adopter of crypto. A year ago, it reopened its crypto trading desk after a three-year break following demand from institutional clients.

And Galaxy was also involved in facilitating Goldman’s first CME Group bitcoin futures transaction last year.

“We are pleased to have executed our first cash-settled cryptocurrency options trade with Galaxy,” Max Minton, Asia Pacific head of digital assets for Goldman Sachs, said. “This is an important development in our digital assets capabilities and for the broader evolution of the asset class.”

Institutional clients traded $1.14 trillion worth of cryptocurrencies on exchange Coinbase Global in 2021, up from just $120 billion the year before, and more than twice the $535 billion for retail, the Wall Street Journal wrote last month.

A survey of 300 institutional investors conducted by State Street in October found that more than 80% were now allowed to have exposure to cryptocurrencies, the WSJ said.

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Shraddha is an India-based journalist who worked in business and financial news before diving into the crypto space. As an investment enthusiast, she has also has a keen interest in understanding crypto from a personal finance standpoint.

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