Goldman Sachs Initiates Onboarding of Clients for Bitcoin Derivative
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Goldman Sachs Initiates Onboarding of Clients for Bitcoin Derivative

According to a report dated October 31st from The Block, Goldman Sachs is officially onboarding clients for its Bitcoin derivatives product. The new service should allow for an investor to hold a short-term position in Bitcoin through non-deliverable future contracts (NDF).


A Detailed Timeline of Goldman Sachs and Bitcoin

New York-based Goldman Sachs doesn’t have the best reputation for supporting Bitcoin. However, a closer look highlights the bank’s open-minded perspective when it comes to the world’s leading digital currency since as early as 2017. In a CNBC interview, Goldman Sachs CEO Lloyd Blankfein explained how the history of currency suggests that Bitcoin could be the next natural progression of money:

“A five dollar gold coin was worth five dollars because it had five dollars worth of gold in it. Then they issue paper money that is backed by gold in the treasury. Then one day, they issue paper money that does not have the backing of gold. There was no pledge that if you turn it in, I’ll give you five dollars of gold. It is fiat money. I say this piece of paper is worth five dollars and so therefore it is five dollars and a lot of people did not take that for a long time. But, now they do without question. You move a little bit further and you get bitcoin that is not a fiat currency so I don’t trust, it and I don’t like it. On the other hand, if it works, I say maybe it was a natural progression from hard money to digital money.”

Later, in May of 2018 Goldman Sachs first announced its plan to initiate a Bitcoin trading service. That announcement came after a reported two-year period of continued interest in virtual currencies from hedge funds and other large investors throughout the world.

Then, in September of 2018, it was reported that Goldman Sachs had dropped its plans for a Bitcoin trading service. The main reason centered around a lack of clear regulatory guidance— something witnessed not just in the US but around the globe. The announcement was followed by a significant plunge in not only the Bitcoin market, but virtually all leading cryptocurrencies.

Apparently, however, the news wasn’t true. According to The Block, Goldman Sachs is currently enlisting clients for its Bitcoin non-deliverable future contracts (NDF), which is a derivative product pegged to futures.

The Race for Bitcoin Futures in the United States

Though the details are yet to be finalized, Goldman Sachs is already bringing on clients to actively trade the new product. The service won’t result in the purchase or trade of actual bitcoins, just the NDF.

While Goldman Sachs works to establish the new service, other enterprises have launched similar products.

Regulated US trading platforms CBOE and CME both provide crypto-based future derivative products. CBOE has announced that it aims to become a world-leader in Bitcoin futures. Pending final approval, Bakkt has also released details of its launch of a Bitcoin derivative product in December 2018.

Recently, institutional giants such as Fidelity and JPMorgan have also moved into the blockchain space.

Apparently Goldman Sachs wants a slice of the pie as well.

What do you think the recent announcement says about the future of institutional firms entering the blockchain space? Will this eventually lead to global adoption? Let us know what you think in the comments below. 


Image courtesy of USA Today.

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November 1, 2018

About Author

SiaMohajer Sia Mohajer is the cofounder of The Tokenist and Coin Crunch. Sia founded Next Ventures in 2013. He believes in a decentralized future and a new era in global finance.