Goldman Sachs Group Inc. is extending its reach beyond Bitcoin and into the realm of Ether. According to Mathew McDermott, head of digital assets at Goldman Sachs, the firm expects to provide options and futures trading in Ether, the coin that powers the Ethereum network, in the coming months.
It’s the next step in Goldman’s crypto ambitions, which began earlier this year with the reopening of a trading desk to assist clients with publicly traded Bitcoin futures. The bank also wants to enable trading through exchange-traded notes that track Bitcoin, according to McDermott.
Amid regulators’ warnings about the risks of crypto’s excessive volatility and role in money laundering, investment banks are moving to offer Bitcoin services to their high-net-worth clientele. Hedge funds are still optimistic about trading Bitcoin, even after values fell in May, plunging from around $60,000 to $33,000 in a couple of days.
“We’ve actually seen a lot of interest from clients who are eager to trade as they find these levels as a slightly more palatable entry point,” McDermott said in a phone interview on Thursday. “We see it as a cleansing exercise to reduce some of the leverage and the excess in the system, especially from a retail perspective.”
Last year, Goldman engaged McDermott, 47, to lead its digital currency efforts. The company has grown from four employees to seventeen under his leadership.
In addition, the bank has made investments in cryptocurrency start-ups. It invested $5 million in Blockdaemon, a company that builds and hosts the computer nodes that makeup blockchain networks.
Goldman led a $15 million investment in Coin Metrics, a cryptocurrency and blockchain data provider for institutional clients, in May, while McDermott joined the board of directors.
Other financial institutions have also extended their cryptocurrency activities. Cowen Inc. intends to provide “institutional-grade” cryptocurrency custody services. Although Standard Chartered Plc is forming a joint venture to acquire and trade virtual currencies, HSBC Holdings Plc is staying away from Bitcoin for the time being.
Digital currencies, according to McDermott’s conversations with clients, aren’t just a fleeting trend. Last week, Goldman Sachs conducted a study of 850 organizations, finding that nearly one in ten were trading cryptocurrency and 20% were interested in it.
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