Goldman Sachs Is Looking To Offer Crypto Options For Institutions

Goldman Sachs is looking into the provision of bilateral crypto options, and getting more involved with crypto derivatives trading for institutions.

The plan could allow holders such as Bitcoin miners and hedge funds to either hedge their risks, or boost yields with customizable offerings.

According to Bloomberg report, Goldman is just one of many Wall Street banks that have started to explore these options.

An option is a contract that allows (but doesn’t require) an investor to buy or sell an asset at a certain price over a certain period of time. ‘Call’ options are those that give holders permission to buy the cryptocurrency, while ‘put’ options give permission to sell.

Every options contract comes with an expiration date by which holders must choose whether to redeem it. However, they effectively let traders/investors benefit from an underlying cryptocurrency’s volatility without being totally exposed to its risks.

The market for these options contracts is available, but is currently dominated by crypto-native companies, such as crypto broker Genesis Global, crypto market maker GSR, and investment manager Galaxy Digital. A more traditional platform in the Chicago Mercantile Exchange (CME) will also soon offer micro Bitcoin and Ethereum options.

Wall Street banks have been held back from entering the crypto spot market due to regulatory uncertainty. However, President Biden’s executive order, which he signed earlier this week, is designed to organize research and regulatory authority of the industry among various federal bodies.

According to SEC Chairman Gary Gensler, the executive order, begins the crypto market move towards regulation.

Back in July last year, Goldman Sachs filed for a “DeFi” ETF that would closely track the performance of the decentralized finance space. And in March, they filed for an ETF with the option to add exposure to Bitcoin.