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Goldman Sachs becomes the first major US bank to offer OTC trading of crypto options

Goldman Sachs began trading bitcoin futures contracts with Galaxy Digital last year. However, its new OTC crypto options trading has a higher risk.
Crypto trading is on the rise in the US. In this episode, Goldman Sachs has started a bitcoin-related instrument with investment firm Galaxy Digital. This over-the-counter (OTC) product is the first offering by a major US bank in the crypto segment. This is a ‘non-deliverable option’. Its settlement will be done in cash on the date of maturity already fixed.

In OTC trading, two parties trade directly in crypto assets for other cryptocurrencies or common currency. In this, large amounts of crypto assets can be bought and sold without any intermediary. Damien Vanderwilt, Co-President, Galaxy Digital, said, “Goldman Sachs’ continued belief in our firm is a testament to our expertise and ability to meet the growing demand from institutions.” Goldman Sachs was started in 1869. Last year it started trading bitcoin products with CME Group . Its Asia Pacific Head of Digital Assets, Max Minton, said: “We are delighted to partner with Galaxy Digital to trade our first cash-settled cryptocurrency options. This is a significant advancement in our digital assets capabilities.”

Institutional investors like Galaxy Digital usually put their funds in a large amount of assets. These transactions are done through crypto exchanges and hence individual investors or institutions can approach the desk for the same in an OTC system. Connor Dempsey of Coinbase Ventures explained in a blog post , “For example, you may run into problems if you try to buy a large number of bitcoins. This can happen if you make the entire purchase on one exchange. That it cannot be bought in one go and you may have to buy it from multiple sellers.”

Goldman Sachs began trading bitcoin futures contracts with Galaxy Digital last year. However, its new OTC crypto options trading carries a high risk. In this, volatility in cryptocurrencies can be a problem for Goldman Sachs. In recent months, some financial institutions have changed their stance on cryptocurrencies and are exploring the possibility of trading related to it.

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