2022-3-11 14:51 |
A plan to offer clients direct exposure to mainstream cryptocurrencies is reportedly in the works by American multinational bank Goldman Sachs Group Inc., as per a report by Bloomberg.
The Thursday report reveals that the bank has been working on a strategy to start offering over-the-counter bilateral crypto options, creating more possibilities for institutional traders who are increasingly interested in deepening their feet into crypto.
While the bank has already been offering Bitcoin, Ethereum options, and futures trading to its clients since June last year in partnership with Mike Novogratz’s Galaxy Digital, this is the first time that it could debut the so-called bilateral crypto options. In May 2021, the banking giant started allowing investors to trade with derivatives pegged to Bitcoin after opening its first non-deliverable forward that eventually pays out in cash.
In December, Andrei Kazantsev, head of crypto trading at Goldman said that they had noted a surge in demand for derivative-type hedging stating that they would soon be unveiling an options market to attract bigger liquidity.
Unlike the usual options and futures trading, bilateral options enable ‘trades to be customized so that crypto holders such as hedge funds and Bitcoin miners can hedge risks or boost yields’.
Whereas the general crypto market is fairly new to this frontier, there has been a surge in new players, especially funds that manage institutional money given the wide range of choices that bilateral options offer.
This week, Chicago-based high-speed trading firm DRW Holdings LLC announced plans to offer bilateral over-the-counter (OTC) derivatives in options citing the reason to improve its market hedge strategy.
Others crypto native firms like Galaxy Digital Holdings LTD and New York-based Genesis Global Trading have already entered into the space as deep liquidity providers.
The relatively low number of players in this sector has been pegged to the lack of clear legislation on cryptocurrencies. With the president’s Biden Executive order on digital assets taking effect Wednesday, it is expected that issues such as internal compliance processes and Know Your Customer (KYC) regulatory complexities will be curved out, enabling more institutions to exploit the opportunities at hand.
Similar to Notcoin - Blum - Airdrops In 2024