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Goldman Sachs Partners with Mike Novogratz’s Galaxy Digital to Strengthen Trading

Damien Vanderwilt, co-president of Galaxy Digital, Mike Novogratz, founder of Galaxy, and Chris Ferraro, co-president of Galaxy.

Source: Galaxy Digital

Goldman Sachs‘Efforts to help hedge funds and other large institutional investors bet Bitcoin I took a step forward.

Banks have started trading Bitcoin futures Galaxy digitalCryptographic Merchant Bank Established by Mike Novogratz, CNBC learned.

According to Galaxy co-president, the deal is the first time Goldman has used a digital asset company as a counterparty since the investment bank set up a cryptocurrency desk last month. Damian Vanderwirt..

Goldman’s move as a leading global investment bank could resonate as a bank on and beyond Wall Street Face more and more pressure From clients who want to be exposed to Bitcoin.By being the first major US bank to start trading cryptocurrencies, Goldman essentially gives other banks cover to start trading, said a former Goldman partner. One Vanderwirt said I participated Last year’s Galaxy.

“Major banks have a number of dynamic movements, number security,” Vanderwirt said in an interview this week. “If one bank is doing this, the other bank [fear of missing out] The client has asked for it, so they will join. “

The Galaxy was scheduled to announce on Friday that it would act as Goldman’s “liquidity provider” (Wall Street terminology for companies that provide quotes for buy and sell orders). CME Group Bitcoin futures.Last month in a memo First reported According to CNBC, Goldman will sign “a new liquidity provider that will help expand our offerings.”

“Our goal is to provide clients with the best pricing and secure access to the assets they want to trade,” said Max Minton, Head of Digital Assets for Asia Pacific at Goldman, in a statement. “. “In 2021, this included cryptocurrencies. We are delighted to find a partner with a wide range of liquidity across the crypto ecosystem and differentiated derivatives capabilities. “

Goldman relies on the Galaxy for access to the world of cryptocurrencies, as the highly regulated banking industry cannot process Bitcoin directly, according to Vanderwirt.

But nothing prevents banks from handling financial bets related to the price of the underlying coin, and that’s where Wall Street is embarking on its crypto journey. He said there are similarities in the area of ​​commodities, with banks trading exposure to pigs and corn without owning physical assets.

Galaxy — its management rank In stock Together with former Goldman executives who are familiar with running regulated businesses, it has established itself as a bridge between financial companies and cryptocurrency venues. The company, which is listed on the Toronto Stock Exchange, is likely to offer shares in the United States this year.

This is a step towards the vision Vanderwilt and other former Goldman executives have for developing Bitcoin’s market infrastructure. As more banks allow clients such as hedge funds, pensions, family offices and sovereign wealth funds to trade Bitcoin, the depth and breadth of the market should expand and eventually Bitcoin’s well-known volatility should decline. He said.

“You are moving market participants north of 90% of retail stores, most of which have access to: Ridiculous amount Introducing leverage to institutional investors with appropriate and proven rules and regulations on leverage, asset-to-liability mismatches and risks, “Vanderwirt said. There is. “

He said banks will be able to take pages from the established financial world and provide clients with a way to bet on Bitcoin using derivatives. This includes price gaps between CME Bitcoin futures and Bitcoin itself, relative value transactions between Bitcoin and Ethereum, and arbitration bets related to the creation of Bitcoin structured bonds.

Goldman’s step in cryptocurrency trading is taking place despite persistent skepticism about Bitcoin from other parts of the company.Most notable is the bank Chief Investment Officer Bitcoin for wealth management bubble It’s not suitable for investors.

However, if a sufficient number of trading clients request a product, the investment bank is obliged to provide it. This is the dynamic that Vanderwirt saw in other early markets around the world during his 20 years at Goldman.

“If the phone rings enough times and the client is trying to get exposure, you finally understand how to do it safely for them and your role in the world acts as a trustee. I understand that it’s not about safely mediating exposure, “he said.

Milestones go around Vanderwirt’s previous life. In 2017, as Goldman’s Senior Trading Executive, he Bank’s first effort Trade Bitcoin futures. The plan was later shelved. Currently, he is helping to make it happen from his position in the Galaxy.

“There’s a lot of irony, I smile very much about it,” said Vanderwirt. “But I’m really happy, it’s a happy perfect circle.”

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Goldman Sachs Partners with Mike Novogratz’s Galaxy Digital to Strengthen Trading

Source link Goldman Sachs Partners with Mike Novogratz’s Galaxy Digital to Strengthen Trading

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