Goldman Sachs, The Global Financial Institution Secures Galaxy Digital as Liquidity Provider for Futures Block Trade

Goldman Sachs reaffirms its stand on crypto assets through its latest partnership with Digital Galaxy in a move seen as a recognition of increasing demand for Bitcoin exposure by institutions.

Clients Want Bitcoin Exposure

Goldman Sachs’s latest partnership with Galaxy Digital sends a resounding message to the financial markets worldwide that the world is waking up to crypto adoption. In its latest move, the U.S. financial giant secured Galaxy Digital’s services as a liquidity provider for trading of Bitcoin futures, according to CNBC.

Recognizing that the increasing need for exposure is expanding to the hedge funds, sovereign funds, family offices, and other institutions, the needs for financial services for Bitcoin cannot be ignored. 

The landscape is fast-changing and Goldman Sachs is brave to step out of its previous position in opposition of Bitcoin, all in approximately a year’s time. Goldman Sachs was previously critical of the role that Bitcoin plays as an asset class. 

CNBC in an exclusive on June 18, 2021, learned that Goldman Sachs is catering to the demands of its clients to have more exposure to Bitcoin, which results in the decision to ramp up on its crypto trading services. The announcement came not long after Goldman Sachs officially recognized Bitcoin as an asset class, a clear recognition of its long-term value and prospects. 

Source : A presentation by Goldman Sachs in May, 2020 offering a less than bullish outlook for Bitcoin

Major Banks Are Considering Crypto-Related Financial Products

The opinion expressed by Vanderwilt, former Goldman partner and current Galaxy co-president, is a practical observation from the position of a former executive in a major financial institution. The risk associated with crypto assets is mainly related to its volatility. Given major participation through various financial institutions will be the breadth and depth that this asset class needs to calm the volatility. 

In an article by CNBC on March 31, 2021, Mary Rich, the global head of digital asset for Goldman’s private wealth management, confirmed that the financial institution is targeting offering a ‘full spectrum’ of investment in bitcoin and digital assets. This investment vehicle will be made available in the second half of this year. The key takeaway from an already positive piece of news for clients is that the future plan seems to also include other crypto assets apart from Bitcoin. 

Warming Up to Bitcoin 

The market for crypto assets may be a relatively young one. Pioneers like Digital Galaxy and Goldman Sachs will have to find ways to integrate their existing financial vehicles to incorporate this new asset class. CNBC quoted Mary Rich again, confirming the need for a well-thought-out implementation process.

The benefit of being the first mover in this new industry is the surge of interest by investors to a market that has little competition. This is probably the benefit that Goldman Sachs recognizes that will give them a competitive edge. Whilst recognizing that the product offered may differ, Goldman has sought the right assistance from an institution that has the necessary expertise to provide the technical support.

Symbiotic Relationship

It is not difficult to anticipate more announcements of a strategic partnership that bridges the gap between the crypto space and the legacy system. The continued interest by institutional investors will be a compelling reason that is enough to change the minds of financial institutions worldwide. 

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