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.
- The bank will then protect itself from volatility by buying and selling bitcoin (BTC, -0.89%) 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.
by Tanzeel Akhtar, Coindesk