Last June, Galaxy Digital facilitated the launch of one of the futures trading products in bitcoin of Goldman Sachs on behalf of CME Group. A few days ago, the major investment bank announced that it had renewed this partnership during an OTC sale of bitcoins. So, is it due to this announcement that the price of bitcoin has risen? This is what we will try to find out.
Institutions increasingly charmed by bitcoin?
As we mentioned earlier, this is not Goldman Sachs’ first attempt. The announcement of this purchase of bitcoin in OTC seems to want to show the will of the large American investment bank toextend its expertise in the field of digital assets.
For those unfamiliar with finance jargon: an OTC (Over the Counter) deal or over-the-counter sale simply means that the transaction was not made on an exchange such as Binance or Kraken. Indeed, institutions such as Goldman Sachs can sometimes buy hundreds or even thousands of bitcoins. So this type of transaction could have an impact on the price of the asset. In order to avoid this, institutions therefore go through intermediaries to finalize their transactions. This is Galaxy Digital.
Unlike the transactions we are used to seeing, this is not a purchase of bitcoins per se, but the sale of a non-deliverable, cash-settled bitcoin option. The reason Goldman Sachs decided to use an option instead of bitcoins was because of the uncertainty surrounding bitcoin’s regulatory status. But also, because banks like Goldman Sachs are subject to rules such as KYC (Know Your Customer), which require them to purchase assets from companies recognized and/or regulated by the SEC. Otherwise, she would be fined.
Max Minton, Goldman’s Head of Digital Assets for Asia-Pacific commented on this transaction in these terms:
“This is an important development in our digital asset capabilities and for the broader evolution of the asset class”
We can therefore interpret his remarks in the sense that Goldman Sachs would be in favor of the adoption of a legal status for bitcoin.
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A transaction that could change regulation
Max Milton is not alone in seeing this transaction as an event that could change bitcoin status in usa.
Indeed, Damien Vanderwilt the co-president and head of global markets at Galaxy Digital thinks that this transaction could pave the way for other banks that would be interested in bitcoin. He expects this sale to:
“opens the door for other banks to see OTC as a conduit for trading digital assets”
Because according to him, one of the main points of friction between the SEC and the players in the cryptocurrency sector is that:
“If you think about crypto today, part of the industry concern is that most players are unfamiliar to regulators and politicians”
But transactions like this should calm the concerns of the SEC, because they are historical players in traditional finance who are taking part:
“What helps is that regulators and government see that companies like Goldman that they have known and trusted for decades will also be participants. »
Damien Vanderwilt
Especially since Goldman Sachs is not on its first attempt. Since it opened non-deliverable futures trading, which is a derivative linked to the Bitcoin price that is settled in cash. It also offers exchange-listed options and Bitcoin and Ether futures. We can imagine that other derivatives will emerge over time.
The arrival of major investment banks in the field of cryptocurrencies is a good sign for the sector. And this announcement could explain this slight pump that we are experiencing at the start of the week. However, it is still too early to know if this kind of transaction could bend the SEC. Although more and more women and politicians speak out in favor of legalizing bitcoin and some even wish to make it legal tender.
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