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Goldman Sachs Offering Bitcoin Derivatives to Investors
The bank will protect itself from the cryptocurrency’s volatility by buying and selling bitcoin futures in block trades.
Goldman Sachs is offering investors access to non-deliverable forwards (NDFs), a derivative tied to bitcoin’s price that pays out in cash, according to a Bloomberg report. When reached by CoinDesk, the investment bank confirmed the news.
STORY CONTINUES BELOW
- The bank will then protect itself from volatility by buying and selling bitcoin futures in block trades through CME Group, using Cumberland DRW as its trading partner.
- NDFs are futures contracts in which counterparties settle the difference between the negotiated NDF price or rate and the spot price or rate on a notional agreed sum.
- In January, CME took the prime spot on the list of the biggest bitcoin futures trading platforms, indicating a continued rise in institutional participation.
- In March, Goldman Sachs relaunched its cryptocurrency trading desk after a three-year hiatus, with plans to once again support bitcoin futures trading.
- A source with knowledge told CoinDesk that Goldman quietly began offering bitcoin derivatives contracts to clients last month to test its hedging methods.
Read more: Goldman Sachs to Offer Bitcoin to Wealth Management Clients
UPDATE (May 6, 19:40 UTC): Adds confirmation from Goldman Sachs.
Tanzeel Akhtar
Tanzeel Akhtar has contributed to The Wall Street Journal, BBC, Bloomberg, CNBC, Forbes Africa, Financial Times, The Street, Citywire, Investing.com, Euromoney, Yahoo! Finance, Benzinga, Kitco News, African Business Magazine, Hedge Week, Campden Family Office, Modern Investor, Spear's Wealth Management Magazine, Global Investor, ETF.com, ETF Stream, CIO UK, Funds Global Asia, Portfolio Institutional, Interactive Investor, Bitcoin Magazine, CryptoNews.com, Bitcoin.com, The Local, The Next Web, Mining Journal, Money Marketing, Marketing Week and more. Tanzeel trained as a foreign correspondent at the University of Helsinki, Finland and newspaper journalist at the University of Central Lancashire, UK. She holds a BA (Honours) in English Literature from the Manchester Metropolitan University, UK and completed a semester abroad as an ERASMUS student at the National and Kapodistrian University of Athens, Greece. She is NCTJ Qualified - Media Law, Public Administration and passed the Shorthand 100WPM with distinction. She does not currently hold value in any digital currencies or projects.
