Goldman Sachs unveils new Bitcoin derivatives product
According to Bloomberg's Matt Leising, U.S. banking giant Goldman Sachs will start offering clients a derivatives product tied to the price of Bitcoin.
The Bitcoin-backed derivatives are non-deliverable forward contracts targeting Wall Street investors. A forward contract is a customized agreement between two parties to buy or sell an asset on a certain date and at a specified price. Put differently, Goldman will allow its clients to speculate on the future price of Bitcoin.
As per Bloomberg’s report, the contracts pay in cash and rely on CME Group’s Bitcoin futures to hedge against the digital asset’s volatility. Block trades are conducted on the CME exchange, with crypto-asset trading company Cumberland DRW acting as Goldman’s trading partner.
Interestingly, the derivatives product had already been quietly introduced to Goldman’s clients since last month.
The signs were already there. Back in March, the firm’s COO John Waldron predicted an “explosion” in demand for digital assets. Meanwhile, Goldman re-launched its crypto trading desk and hinted at dabbling into crypto custody earlier this year. And more recently, the bank just spearheaded a $15 million funding round in crypto data analytics startup CoinMetrics.