As hedge funds have been seeking derivative exposure to crypto currencies without owning them as a way of hedging their bets, Goldman Sachs completed its first cash-settled cryptocurrencies options trade with crypto merchant bank Galaxy.
“We are pleased to have executed our first cash-settled cryptocurrency options trade with Galaxy,” Max Minton, Goldman’s Asia Pacific head of digital assets, said in a statement. “This is an important development in our digital assets capabilities and for the broader evolution of the asset class.”
The non-deliverable option settles the difference in the value of the asset in cash and does not require delivery of the underlying crypto asset.
“This trade represents the first step that banks have taken to offer direct, customizable exposures to the crypto market on behalf of their clients,” told Galaxy vice-president Damien Vanderwilt to CNBC.
By acting as a principal in the transactions the bank is taking on greater risk, giving the crypto currencies greater credibility.