One of the largest investment banks in the world just launched a cryptocurrency trading desk – although executives made sure they only trade derivatives and have no actual digital assets on their books.
A CNBC report this morning revealed an internal Goldman Sachs memo announcing the launch of a cryptocurrency trading desk. The desk will be part of Goldman's Global Currencies and Emerging Markets division and will be overseen by Mathew McDermott, Head of Digital Assets.
The news comes shortly after a report yesterday that Goldman had begun offering customers BTC trading through undeliverable futures contracts (NDFs), a derivative tied to the price of Bitcoin. Observers noted that this choice of derivative reduces Goldman's risk of exposure to BTC as the vehicles are purchased and settled in cash.
The memo written by Goldman partner Rajesh Venkataramani indicated that the newly formed trading desk will currently only trade in NDFs, along with "CME BTC future trades on a main basis, all of which will be settled in cash".
Venkataramani noted that the asset management giant "is unable to physically trade bitcoin or any cryptocurrency (including Ethereum)" and that it would act prudently and offer its clients exposure to assets alongside bitcoin derivatives.
"Looking ahead, as we continue to expand our market presence, albeit in a measured manner, we are selectively onboarding new liquidity providers to expand our offering," he wrote.
Goldman maintains relationships with cryptocurrencies again and again. In late 2017 there were rumors that the wealth management firm was exploring a desk (though it was also concerned with security at the time), a move some jokingly refer to as a top signal – though David Solomon, CEO of Goldman Sachs, disproved the story in 2019.
We classic cars learned that when @GoldmanSachs steps into a niche market, it's time to protect your money. $ BTC pic.twitter.com/tHfRkS4igb
– Peter Brandt (@PeterLBrandt) March 1, 2021
Despite its cautious entry into trading, Goldman has aggressively pursued other avenues to capitalize on blockchain technology. The company is participating in a recently announced $ 120 million sale of digital bonds on Ethereum and participated in a $ 15 million donation to crypto intelligence startup Coin Metrics earlier this week.