Goldman Sachs Forms Crypto Trading Team, Offers Bitcoin Derivatives to Investors

Barely sixteen hours after announcing its  decision to offer Bitcoin derivatives to its investors, Goldman Sachs becomes the first American Bank to form a crypto trading team, and the latest to offer crypto-related services.

According to a report by Bloomberg on Thursday, customers of Goldman Sachs can now trade non-deliverable forwards (NDF), a derivative item tied to Bitcoin’s value starting from May 6th, 2021.  

An NDF is a forward contract between two parties that allows them to settle differences between the contracted NDF price and the eventual price at a set date. Thus, in this case, an NDF will permit financial backers to predict Bitcoin prices against future dates.

Considering the volatility of bitcoin’s value, Goldman Sachs will shield its customers from the unpredictability of the market by purchasing BTC in block trades on CME Group, with the aid of crypto-asset trading platform, Cumberland DRW LLC.

The latest development is not entirely new, given the multinational investment bank announced its plans for the leading cryptocurrency in March. The curious thing  is the increasing slew of banks easing into the cryptocurrency space.

The crypto industry exists for more than a decade, and it has faced its share of criticisms and write-offs from Wall Street giants. The last two years, however, have witnessed a gradual paradigm shift, and one that is appearing accelerated in 2021.

Goldman Sachs Forms Crypto Trading Team

According to an internal memo obtained by CNBC on Friday, the multinational bank will be creating its own crypto trading team.

The team, according to the memo, will be part of Goldman’s global currencies and emerging markets (GCEM) business, and is part of the company’s attempts to increase its reach in supplying crypto related services. The team as of today has begun trading Goldman’s newly founded NDF.

What This Means

Apart from NYDIG’s recent announcement of the decision of several US Banks to offer cryptocurrency purchase with bank accounts, there is also the new trend of influential American Banks offering cryptocurrency related services.

Goldman Sachs is not alone in this endeavor. Today, Citi announced plans to offer crypto trading and custody services to its customers, following in the footsteps of banks like Morgan Stanley and New York Mellon who have offered similar services in the past few months.

Justin Chow, Global Head of Business Development at Cumberland DRW, commented on his  company’s recent partnership with Goldman Sachs, acknowledging that it had been a long time coming anyway. According to Chow, the years have given the crypto industry enough time to mature.He believes Goldman Sachs could not have chosen a time better than now.

“The crypto ecosystem is developing rapidly,” Chow confessed, before touting Goldman Sachs to offer more crypto-related services in the future.