Goldman Sachs Group Inc. goes beyond the Bitcoin world and expands into the Ether world.
The bank expects to provide options and futures trading in Ether, the token that powers the Ethereum network, in the coming months, according to Mathew McDermott, Goldman's director of digital assets.
It's the next move in Goldman's crypto ambitions, which began earlier this year with the reopening of a trading desk to assist clients with publicly traded Bitcoin futures. The bank also wants to enable trading through exchange-traded notes that track Bitcoin, according to McDermott.
Despite regulators' warnings about the dangers of crypto's excessive volatility and role in money laundering, investment banks are moving up to offer Bitcoin services to their high-net-worth clientele. Hedge funds are still enthused about trading Bitcoin, even after values fell in May, plummeting from around $60,000 to $33,000 in a couple of days.
In a phone interview on Thursday, McDermott said, "We've actually received a lot of interest from clients who are keen to trade as they perceive these levels to be a bit more palatable entry point." “From a retail viewpoint, we see it as a cleansing exercise to alleviate some of the leverage and excess in the system.”
Last year, Goldman hired McDermott, 47, to lead its digital currency efforts. The company has grown from four employees to seventeen under his leadership.
In addition, the bank has made investments in cryptocurrency start-ups. It invested $5 million in Blockdaemon, a company that builds and hosts the computer nodes that make up blockchain networks.
Goldman made a $15 million investment in Coin Metrics, a cryptocurrency and blockchain data provider for institutional clients, in May, and McDermott joined the board of directors.
He explained, "We're looking at a variety of other companies that fit within our strategic approach."
Other financial institutions have also extended their cryptocurrency activities. Cowen Inc. intends to provide “institutional-grade” cryptocurrency custody services. Standard Chartered Plc is forming a joint venture to acquire and trade virtual currencies, but HSBC Holdings Plc is staying away from Bitcoin for the time being.
Digital currencies, according to McDermott's talks with clients, aren't just a fleeting trend. Last week, Goldman Sachs conducted a study of 850 organisations, finding that nearly one in ten was trading cryptocurrency and 20% are interested in it.
He stated, "Institutional adoption will continue." “Despite the large price fall, there is still a lot of interest in this space.”
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