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Goldman Sachs executes its first bitcoin derivatives trades

Goldman Sachs executed its first cryptocurrency trades and formalised the set-up of its bitcoin desk on Friday, two months after the US bank announced that it would re-enter the fledgling market.

In a memo sent to staff on Thursday, seen by the Financial Times, Rajesh Venkataramani, head of major currencies, informed staff that the bank had “successfully executed” trades of two types of bitcoin-linked derivatives.

The bank said on March 1 that it would relaunch its mothballed cryptocurrency trading desk due to growing demand from institutional clients. Goldman was one of the first banks to set up a crypto operation but the creation of the desk in 2018 coincided with bitcoin’s spectacular price crash, prompting the bank to quietly abandon the initial project.

The value of bitcoin, the largest cryptocurrency by volume, is up 95 per cent since the start of the year after a spectacular rally last year that saw it become one of the best-performing financial assets in the world. On Friday, bitcoin was trading at $57,385.

The revived Goldman trading desk will not deal in cash cryptocurrencies but instead trade futures and non-deliverable forwards as part of the initially “quite narrow” push into the space, according to Mathew McDermott, head of the digital assets team.

Initially the bank will only allow its prime brokerage and private bank clients access to its trading team and cryptocurrency research.

Venkataramani will head the cryptocurrency trading team while McDermott will oversee areas including central bank digital currencies and blockchain. The new team sits within the bank’s global currencies and emerging markets business.

“I am pleased to announce the formation of the firm’s cryptocurrency trading team, which will be our centralised desk for managing cryptocurrency risk for our clients,” Venkataramani wrote in the memo sent on Thursday, which was first reported by CNBC.

The bank has also launched a cryptocurrencies dashboard for clients to provide market data and information about bitcoin and alternatives. Due to regulatory concerns, banks are unable to trade cash cryptocurrencies, and are limited to regulated markets such as bitcoin futures on the Chicago Mercantile Exchange.

“Looking ahead, as we continue to broaden our market presence, albeit in a measured way, we are selectively onboarding new liquidity providers to help us in expanding our offering,” Venkataramani added.

McDermott said in a podcast in early March that the bank has seen a surge in demand for cryptocurrency services since last year, noting that the current rally in bitcoin has been driven by professional clients rather than retail investors.

Goldman is one of a handful of large US banks that have recently announced tentative efforts to enter the booming crypto arena.

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