Goldman Sachs may be adding Crypto contracts but don’t expect it to start buying and selling Bitcoins just yet.
The bank is preparing to establish a new cryptocurrency market on Wall Street by starting small and offering a limited amount of derivatives, according to an insider. The bank is said to begin trading Bitcoin futures in a principal, market-making volume and will also create non-deliverable forward products.
Several Wall Street firms have started offering clients futures from CBOE Global Markets Inc. and CME Group Inc. December last year. However, one problem with buying and selling actual bitcoins is that they are prone to being stolen by hackers. This means banks that are looking into facilitating those transactions must learn how to protect such assets, a step which would require approval from regulators.
Sometime in April it was reported that Goldman Sachs hired Justin Schmidt as head of its digital asset markets to help expose and educate clients to cryptocurrencies. For the time being, Schmidt will sit on the firm’s currency desk.
Based on a New York Times report, the bank’s decision to offer forward products will start in the next few weeks. This means the Goldman’s project is true to its schedule: those who are familiar with the bank’s plans last year would know that the firm plans to have its new business up and running by the end of June.