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Goldman Sachs Reportedly Launches Bitcoin Derivatives

Goldman Sachs Reportedly Launches Bitcoin Derivatives 101
David Solomon, CEO of Goldman Sachs. Source: a video screenshot.

Veteran Wall Street investment bank Goldman Sachs is launching a type of derivatives contracts of bitcoin for selected clients, according to a unsourced report by The Block.

Derivatives are tradeable instruments that gives a trader exposure to the price movement of an asset – in this case bitcoin – without owning the actual bitcoin.

Specifically, the bank has reportedly onboarded clients to trade its forward contracts on bitcoin, a type of derivative that is tied to the futures market, The Block reported this week, citing a “direct source.” In other words, crypto trading at Goldman Sachs is still strictly limited to derivatives, and does not involve any “physical” cryptocurrencies changing hands.

However, the bank is in no rush to roll out more crypto derivatives products, according to the report. The source also said that earlier reports that Goldman is exploring similar derivatives contracts for ether “isn’t accurate.”

The steps taken by Goldman Sachs in the crypto world is watched by many in the community due to its fame and position as one of the most prominent financial institutions in the world. ‘If Goldman Sachs embraces crypto, everyone else will too’, the reasoning goes.

It is already known that Goldman Sachs is working to set up a trading desk for cryptocurrency derivatives. Back in September, Goldman’s Chief Financial Officer Marty Chavez (he’s leaving the post on November 5 to become Vice Chairman of the firm and Co-Head of the Securities Division) stated publicly that no plans had changed in regards to the trading desks, despite earlier reports that the bank would postpone the plans.

In the past, Goldman Sachs has also invested in a number of blockchain-related companies, including Circle and the California-based blockchain security company BitGo, in a funding round that brought in USD 58.5 million from several prominent investors.

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