Multinational investment bank Goldman Sachs is now trading Bitcoin futures blocks, with Galaxy Digital Holdings acting as the liquidity provider and providing quotes for buy and sell orders.
“The trades represent the first time Goldman has used a digital assets firm as counterparty since the investment bank set up its cryptocurrency counter last month,” reported CNBC. “The moves of Goldman, the preeminent global investment bank, can resonate on Wall Street and beyond as banks are increasingly under pressure from customers seeking exposure to Bitcoin. By being the first major US bank to begin trading in cryptocurrencies, Goldman is essentially giving cover to other banks to do the same. “
Galaxy was likely chosen as a partner for Goldman because of the limitations the banking industry faces in dealing directly with Bitcoin. But products like Bitcoin futures, which are less tied to the underlying asset, are more acceptable on a regulatory level.
Galaxy Digital co-president Damien Vanderwilt cited the move and growth of institutional bitcoin services overall as things that will be critical to bitcoin price in the long run.
“They’re shifting market participants from 90% retail, a large fraction of whom have access to ridiculous amounts of leverage, to an institutional community that has adequate, proven rules and regulations on leverage, asset-liability mismatch, and more,” said he told CNBC. “The more activity penetrates the institutional community, the less volatility there will be.”
Goldman has been relatively advanced in introducing Bitcoin in the past few months. It announced plans to offer Bitcoin investment vehicles to its clients in March, led an investment round at Bitcoin data provider Coin Metrics in May, and unveiled its cryptocurrency trading team that same month, offering Bitcoin derivatives.