Goldman Sachs executes its first bitcoin derivatives trades

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Goldman Sachs conducted its first cryptocurrency deals and formalized the establishment of its Bitcoin desk on Friday, two months after the US bank announced it would re-enter the fledgling market.

In a Financial Times memo sent to staff on Thursday, Rajesh Venkataramani, head of major currencies, informed staff that the bank had “successfully traded” two types of Bitcoin-linked derivatives.

The bank announced on March 1 that it would restart its mothballed cryptocurrency trading desk due to growing demand from institutional clients. Goldman was one of the first banks to set up a crypto operation. However, the establishment of the desk in 2018 coincided with the spectacular drop in the price of Bitcoin, prompting the bank to quietly abandon the original project.

Bitcoin, the largest cryptocurrency by volume, is up 95 percent in value since the start of the year after becoming one of the top performing financial assets in the world after a spectacular rally last year. Bitcoin was trading at $ 57,385 on Friday.

According to Mathew McDermott, head of the digital assets team, the revitalized Goldman trading desk will not trade cryptocurrencies for cash, but will instead trade futures and undeliverable futures as part of the initial “rather tight” push into space.

Initially, the bank will only give its prime brokerage and private banking customers access to its trading team and cryptocurrency research.

Venkataramani will lead the cryptocurrency trading team while McDermott will oversee areas such as central bank digital currencies and blockchain. The new team works in the bank’s global currency and emerging markets business.

“I am pleased to announce the formation of the company’s cryptocurrency trading team, which will be our central desk for managing cryptocurrency risk for our customers,” wrote Venkataramani in the memo sent Thursday, first reported by CNBC.

The bank has also launched a cryptocurrency dashboard that customers can use to provide market data and information on Bitcoin and alternatives. Due to regulatory concerns, banks cannot trade cryptocurrencies for cash and are restricted to regulated markets such as Bitcoin futures on the Chicago Mercantile Exchange.

“Looking ahead, as we continue to expand our market presence, albeit in a measured manner, we are selectively onboarding new liquidity providers to expand our offering,” added Venkataramani.

McDermott said in a podcast in early March that the bank’s demand for cryptocurrency services had risen sharply since last year, noting that the current rally in Bitcoin was driven more by professional customers than retail investors.

Goldman is one of the few major U.S. banks that recently announced preliminary efforts to enter the booming crypto arena.