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By Anchalee Worrachate
Goldman Sachs Group Inc. is moving beyond the world of Bitcoin and expanding into Ether.
The bank plans to offer options and futures on Ether, the coin that powers the Ethereum network, in the coming months, according to Mathew McDermott, head of digital assets at Goldman.
This is the latest step in the Wall Street giants’ crypto ambitions after Goldman restarted a trading desk this year to help clients trade Bitcoin-related exchange-traded futures. McDermott said the bank also plans to facilitate transactions via exchange-traded notes following Bitcoin.
Despite all the warnings from regulators about the risks posed by the extreme volatility of cryptos and their role in money laundering, investment banks are mobilizing to offer Bitcoin services to their large customers. Even after the prices fell in May from around $ 60,000 to $ 33,000 in a matter of days, hedge funds are still enthusiastic about trading Bitcoin.
Bloomberg Weve has actually seen a lot of interest from clients keen to trade as they find these levels a slightly more acceptable entry point, McDermott said in a telephone interview Thursday. We see it as a clean-up exercise to reduce some of the leverage and excess in the system, especially from a retail perspective.
Goldman enlisted McDermott, 47, to lead its digital currency efforts last year. Under his leadership, the company grew from four to 17 people.
The bank has also invested in crypto start-ups. He invested $ 5 million in a fundraiser by Blockdaemon, a company that creates and hosts the computer nodes that make up blockchain networks.
In May, Goldman led the $ 15 million investment in Coin Metrics, a cryptocurrency and blockchain data provider for institutional clients, and McDermott joined the company’s board of directors.
We are looking at a number of different companies that fit our strategic direction, he said.
Other banks have also expanded their crypto operations. Cowen Inc. plans to offer institutional grade custody services for cryptocurrencies. Standard Chartered Plc is setting up a joint venture to buy and sell virtual currencies, although HSBC Holdings Plc is avoiding Bitcoin for the time being.
McDermott said his conversations with customers show that digital currencies are not just a passing fad. In a survey last week of 850 institutions, Goldman found that nearly one in 10 institutions trades crypto and that 20% are interested.
Institutional adoption will continue, he said. Despite the significant price correction, we continue to see significant interest in this space.
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