Is Goldman Sachs Finally Launching a Bitcoin Trading Product?
After a full year of speculation, Goldman Sachs Group Inc. may finally be following through with plans to launch a bitcoin trading product. According to The Block, Goldman has already begun a limited roll-out of its new trading platform.
About to Make a Splash?
Citing sources familiar with the matter, The Block reported Tuesday that Goldman Sachs is already signing up new customers for a forthcoming bitcoin derivatives product. Although details remain scant, the New York mega firm appears to be pushing for a non-deliverable forward – a cash-settled product that is comparable to futures but isn’t traded on an exchange.
Last year, Bloomberg reported that Goldman Sachs was planning to launch a full-fledged bitcoin trading desk by mid-2018 in its quest to bring crypto trading to mainstream investors. The bank has since scaled back that timeline and has apparently done away with the concept for now. The trading desk was initially conceived to support physical cryptoassets, including bitcoin. Although the bank has been involved in clearing bitcoin futures contracts that trade on CBOE and CME, Goldman announced back in August that it had “not reached a conclusion on the scope of our digital asset offering.”
Rumors linking Goldman Sachs to crypto offerings continue to swirl. Earlier this month, Abacus Journal reported that the bank was actively seeking the creation of an Ethereum derivatives product that would serve many of the same functions described above with respect to bitcoin. According to The Block, those rumors are not accurate.
Putting digital assets in the hands of institutional markets is considered by many to be the greatest hurdle standing in the way of mass adoption. This line of reasoning also believes that institutional access to the market, whether physical or derivatives-based, could spearhead the next wave of growth. While significant efforts have already been made to democratize cryptocurrencies and temper fears over custody and consumer protection, adoption at the institutional level remains limited.
Intercontinental Exchange (ICE) is launching its new cryptocurrency trading platform, Bakkt, in mid-December. The platform will initially offer physically settled bitcoin futures contracts as opposed to the derivatives contracts currently offered by the Chicago-based clearing houses. This means traders who purchase a futures contract will receive physical bitcoin on settlement.
ICE’s foray into cryptocurrencies could be a significant step in the market’s gradual pivot toward institutional investment. In the absence of a bitcoin exchange-traded fund (ETF), physical futures could serve as a promising alternative for investors looking to diversify into crypto without the risk of trading on a virtual exchange.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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