Tuesday, November 29, 2022

Goldman Sachs To Offer OTC Ether Options Following Surging Interest From Clients In ETH

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American multinational investment bank Goldman Sachs is considering adding over-the-counter (OTC) Ether options to its suite of options, a month after launching OTC bitcoin options.

According to a Tuesday report by Bloomberg, Andrei Kazantsev, the bank’s global head of crypto trading disclosed the plan during a Goldman client webinar citing increased interest in the world’s second-largest cryptocurrency from the bank’s customers. He further stated that the banking behemoth envisioned debuting cash-settled Ether options “in due course”.

Last month, Goldman Sachs (AUM $2.1 trillion) started offering over-the-counter bitcoin options after contracting crypto merchant bank Galaxy Digital and becoming the first major U.S. bank to offer such a product. Options are financial derivatives that are used by investors to boost yield or hedge risks while over-the-counter transactions are typically larger trades negotiated privately and off-chain. Options that have largely been associated with traditional markets have over the years become appealing to crypto traders finding their way into Ethereum’s DeFi ecosystem since they enable them to hedge their risk and earn yields.

With the crypto market bursting in the past few years, most notably since 2017, institutional players have been jostling for a piece of the pie with banks that previously stayed on the sidelines increasingly taking on greater risk by acting as principals in the transactions.

Since launching OTC Bitcoin options in mid-march, clients have increasingly been paying attention to Ether, which they now see as “more of an investable asset class,” according to George Lewin-Smith, an associate on the bank’s digital-assets team.

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Much of the attention around Ether has been on the long-anticipated transition from Proof Of Work to Proof Of Stake or “the merge”. This upgrade is widely perceived as the ultimate catalyst for ether’s price prompting investors to fiercely request the introduction of Ethereum based products from their banks and firms.

Although Goldman is yet to start offering spot crypto trading, another highly sought product, it currently provides access to various European and Canadian exchange-traded products that can be used as a proxy, as the U.S. Securities and Exchange Commission tightens its noose around the so-called crypto ‘securities’ and exchange-traded funds (ETFs). 

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