American multinational investment bank, Goldman Sachs will soon introduce a form of bitcoin futures trading for its customers. New York Times reports that the financial service giant will use its own money to trade with clients in contracts linked to the price of Bitcoin.
This move by the bank is in response to the requests from several of its customers who are interested in holding bitcoin according to a Goldman executive. Rana Yared, who is an MD in Principal Strategic Investments team in the Securities Division, said the bank understands the clients’ desire to hold bitcoin. “It resonates with us when a client says, ‘I want to hold bitcoin or bitcoin futures because I think it is an alternate store of value,'” she said.
Bitcoin Futures Trading
Mainstream trading of cryptocurrencies, bitcoin futures particularly, was first in by Cboe in December followed swiftly by CME a week later. The interest in bitcoin futures contracts has increased as Cboe recorded the highest volume the contracts sold last month. The bitcoin futures contract involves an agreement to buy or sell bitcoins at a specified price and time in the future.
Goldman will “create its own, more flexible version of a future, known as a non-deliverable forward, which it will offer to clients.”
No Cryptocurrency trading yet, maybe in the future
The New-York based Goldman Sachs will not trade bitcoins or other cryptocurrencies directly. WSJ reports that the bank has put in place a team to look into the regulatory approval and handle risks associated with holding cryptocurrency. Barclays in the United Kingdom has ruled out any chance of operating a cryptocurrency desk in the near future.
The bank has not given a date for the launch of the contracts, though the initiative has been agreed by the board of directors. To coordinate the initiative, the bank has hired its first digital asset trader. Justin Schmidt who left his job as an electronic trader at Seven Eight Capital to trade cryptocurrencies will be responsible for the banks crypto trades.
Although Ms. Yared and her colleagues at the bank believe that bitcoin is not a fraud, they remain mindful of the risks. “It is not a new risk that we don’t understand […] it is just a heightened risk that we need to be extra aware of here.” She said.
Last year, the banks CEO Lloyd Blankfein tweeted that he was “thinking about bitcoins”.