The First OTC Crypto Trade Transaction: Courtesy Of Goldman Sachs & Galaxy Daigital

2022-03-21 23:54:01
Goldman Sachs Makes Crypto History

According to one of the largest banks on Wall Street, Goldman Sachs, the company has successfully managed to complete an OTC (over-the-counter) crypto trade for the first time ever. In order to achieve this historic milestone, the Wall Street bank turned to Galaxy Digital, a crypto company that specializes in providing brokerage services, among other things.

In what both parties call ‘a first-of-its-kind transaction by a major U.S. bank’, Goldman Sachs pulled off the world’s first OTC crypto transaction in the manner of a bitcoin NDO (non-deliverable option).

Those not familiar, options are special contracts that ensure the holders have the right to purchase or sell underlying securities at a certain price, for a limited amount of time. The benefit of options contracts is that they reduce the risk of highly volatile assets when trading.

Moreover, non-deliverable options are settled specifically with cash, rather than using an underlying asset such as crypto, for example. This means that Goldman Sachs relied on an over-the-counter market in order to conduct a private transaction, rather than trading cryptocurrencies directly from a crypto exchange.

Max Minton, an executive from Goldman Sachs, states that the OTC transaction is a historic moment for the company while giving props to Galaxy Digital and their effort in achieving this milestone.

We are pleased to have executed our first cash-settled cryptocurrency options trade with Galaxy. This is an important development in our digital assets capabilities and for the broader evolution of the asset class.Max Minton | Executive - Goldman Sachs
Strong Partnership With Galaxy Digital

Furthermore, Goldman Sachs’ announcement makes sure to specifically mention that Galaxy Digital is also responsible for facilitating the bank’s first-ever CME Group Inc. Bitcoin Futures transaction, in 2021. Considering that the founder of Galaxy Digital, Mike Novogratz, is a huge supporter of crypto finance, he states that ‘ bitcoin is a lifeline to people in countries with really poor stewardship of the economy’.

Similar to his opinion, the co-president and head of global markets with Galaxy Digital, Damien Vanderwilt, believes that this historic transaction will definitely ‘open the door’ for other banking entities that are exploring similar OTC transaction solutions.

And that the fact that a banking giant such as Goldman Sachs turns to Galaxy Digital for its expertise, only speaks volumes about the dedication of Galaxy towards finding crypto solutions.

(We) expect the transaction to open the door for other banks considering OTC as a conduit for trading digital assets. Goldman’s continuing trust in us is a testament to Galaxy’s expertise and ability to meet the evolving demands by institutions as crypto solidifies itself as the fifth asset class.Damien Vanderwilt | Co-president and Head of Global Markets - Galaxy Digital

By executing the first-ever OTC crypto transaction trade with bitcoin non-deliverable option, Goldman Sachs enters the crypto history books. And if we take into account that just a couple of years ago the CEO of Goldman Sachs openly stressed his dislike of digital assets, this 360 change is definitely something that no one saw coming.

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