Goldman Sachs completes the first ‘over-the-counter’ crypto trade

Goldman Sachs announced it became the first major US bank to have made an over-the-counter (OTC) cryptocurrency transaction. The bank bought an OTC Bitcoin non-deliverable option (NDO) from Galaxy Digital. The bank’s first OTC crypto transaction could spur other Wall Street giants to follow suit.

An OTC Bitcoin NDO sounds complicated, but it basically means Goldman Sachs bought a contract betting on the future price of Bitcoin – rather than actually buying the digital asset itself.

Galaxy Digital is a New York-based cryptocurrency investment firm, run by billionaire Mike Novogratz. It has a partnership with Goldman Sachs as a liquidity provider for the investment bank’s Bitcoin futures trading desk, which launched last year.

Max Minton, Asia Pacific head of digital assets for Goldman Sachs, said in a statement: “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.”

Damien Vanderwilt, co-president and head of global markets at Galaxy Digital, added: “We are pleased to continue to strengthen our relationship with Goldman and expect the transaction to open the door for other banks considering OTC as a conduit for trading digital assets.”

Goldman Sachs is one of the biggest traditional financial institutions in the United States to be involved in the cryptocurrency industry. The financial giant is known for backing Circle, the blockchain technology firm operating the USD Coin (USDC), the second-largest stablecoin by market capitalization. Last year, Goldman Sachs made a historic move into the crypto industry, launching its first trading services for BTC derivatives and Ether derivatives.

Options trading is an extremely popular form of investing in cryptocurrency. Instead of traders buying and selling digital assets, they buy and sell contracts that bet on the prices of the assets.

It’s a huge market: In the last 24 hours, $16.5 billion was traded on Binance, the world’s biggest crypto exchange, on the spot market. And the 24-hour trading volume for its futures market stood at $44 billion.