A trader works at the Goldman Sachs booth on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Goldman Sachs has officially ushered in the era of cryptocurrency trading on Wall Street.
The bank told its market staff on Thursday that a newly created cryptocurrency desk had successfully traded two types of Bitcoin-linked derivatives. This is evident from an internal memo obtained solely from CNBC.
The crypto team consists of the company’s global currency and emerging markets trading division and reports to Goldman partner Rajesh Venkataramani, who wrote the memo. It’s part of the bank’s overall digital asset effort led by Mathew McDermott.
Goldman Sachs, a globally dominant investment bank for trading fixed income and stocks, had been considering creating a Bitcoin trading desk since at least 2017. The company initially presented those plans and restarted the crypto trading team in March, Reuters reported earlier this year. Thursday’s memo marked the first time Goldman of New York officially recognized its involvement in cryptocurrency trading.
Under CEO David Solomon, Goldman has announced that it will expand its market presence by “selectively involving” crypto trading institutions to expand its offering. The company also announced that it launched a new software platform this week that will provide customers with the latest prices and news on cryptocurrencies.
Banks, including Goldman and rival Morgan Stanley, had announced plans to offer bitcoin investments to wealthy clients in their wealth management areas, but have largely stayed away from the volatile assets in their Wall Street trades. Traders from firms like JPMorgan Chase have asked managers when they could deal with Bitcoin, CNBC reported.
The derivatives, Bitcoin futures and undeliverable futures traded by Goldman are ways to bet on the price of Bitcoin. The contracts are processed in cash and do not require Goldman to deal with actual bitcoin, which is known in the industry as “physical bitcoin,” as the bank is not yet in a position to do so, as Venkataraman noted in the memo.
Here is the memo:
May 6, 2021
Formation of a cryptocurrency trading team
I am excited to announce the formation of the company’s cryptocurrency trading team, which will be our central desk for managing cryptocurrency risk for our customers. The crypto trading team will be part of Global Currencies and Emerging Markets (GCEM) and will report to me as part of the company’s Digital Assets efforts led by Mathew McDermott.
As part of our initial launch, we have successfully executed Bitcoin (BTC) NDFs and CME BTC future trades on a main basis, with all cash settlements being made. Looking ahead, as we continue to expand our market presence, albeit in a measured manner, we are selectively bringing in new liquidity providers to expand our offerings.
In addition, we launched our Digital Assets Dashboard yesterday, which provides our customers with daily and intraday market data and news for cryptocurrencies. We invite you to present the dashboard to your customers. For more information on trading permits and onboarding, please contact the Digital Assets team.
Please note that the company is unable to physically trade Bitcoin or cryptocurrency (including Ethereum).
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