Goldman Sachs Seeks to Expand Its Crypto-Related Services

The Goldman Sachs Group is reportedly looking to expand its cryptocurrency-related services by offering clients two-sided cryptocurrency options, according to people familiar with the matter.

Under two-sided options, clients who have crypto-type hedge funds or bitcoin miners will be able to customize their trades to hedge risks or boost returns. Goldman’s global head of crypto trading Andrei Kazantsev said in December that there was a lot of demand for derivative-type hedging and that the next step would be to develop an options market.

The Wall Street giant’s interest in the cryptocurrency sector has been on the rise since it relaunched its cryptocurrency trading desk in March 2021 after a three-year hiatus. The lender has made multiple moves to expand in the crypto sector contrary to most of its peers.

Partnership with Galaxy Digital

According to a March 9 SEC filing, Goldman Sachs will begin offering crypto-curious clients access to an Ethereum fund through Galaxy Digital.

“Goldman Sachs & Co. LLC will receive an introduction fee with respect to certain clients introduced to the Issuer [Galaxy Digital].”

Galaxy Digital is an investment firm run by Mike Novogratz and also provides liquidity to Goldman for its bitcoin futures offering. The Galaxy Institutional Ethereum Fund was launched in March 2021 and has a minimum investment threshold of $250,000.

Galaxy Digital is also offering a Bitcoin fund to Morgan Stanley clients in a similar deal.

Goldman bullish on Bitcoin

Goldman Sachs has been bullish on Bitcoin for most of the last 12 months. Earlier in January, an analyst at the bank said that Bitcoin could potentially compete with gold as a store of value and begin to encroach on its market share.

The lender said that Bitcoin currently has about a 20% share of the “store of value” market, of which gold is also a part. Goldman said that if the market share rises to around 50%, it could push the price of Bitcoin to $100,000.

On the other hand, the lender is also among those who are a bit wary of the speed at which traditional banking in some parts of the world is moving towards cryptocurrencies. Despite continued interest in cryptocurrencies, most major banks are still hesitant to dive deeper into the sector due to volatility and lack of regulatory protection.

However, with the Biden executive order coming into force, the regulatory situation around cryptocurrencies is likely to improve.