(Kitco News) – The cryptocurrency market is no longer just an investment playground for retail traders, as the launch of spot Bitcoin (BTC) exchange-traded funds (ETFs) and the subsequent rise in Bitcoin price has caught the attention of hedge fund clients at Goldman Sachs, according to a report from Bloomberg.
“The recent ETF approval has triggered a resurgence of interest and activities from our clients,” said Max Minton, Goldman’s Asia Pacific head of digital assets, in an interview with Bloomberg. “Many of our largest clients are active or exploring getting active in the space.”
Goldman Sachs first started offering crypto trading services to clients in 2021 and currently offers access to cash-settled Bitcoin option and Ether option trading, in addition to CME-listed Bitcoin and Ether futures. The platform does not allow trading of the underlying tokens, however.
“It was a quieter year last year, but we’ve seen a pickup in interest from clients in onboarding, pipeline, and volume since the start of the year,” Minton said.
He noted that the majority of demand has been coming from the firm's existing clients, highlighting traditional hedge funds as the most interested. The bank is also expanding into “a wider universe of clients,” including asset managers, bank clients, and select digital asset firms, he said.
Thus far, clients have been using crypto derivatives for directional bets, yield enhancement, and hedging purposes, Minton added. They have mainly focused on Bitcoin-related products, but he said that could change depending on whether Ethereum (ETH) ETFs win approval to launch in the U.S.
Goldman is also active in tokenizing traditional assets using blockchain and operates a digital-asset platform called GS DAP, which “captures the full complexity of rights, obligations, and cash flows throughout the lifecycles of assets,” and “makes the digital representation and workflow accessible and fully automatable across distributed interconnected ecosystems of participants.”
The firm also recently participated in a pilot test on a blockchain network that connects banks, asset managers, and exchanges. BNY Mellon, Cboe Global Markets, and several other firms also participated in the pilot, which involved the execution of more than 350 simulated transactions on blockchain for tokenized assets, fund registry, digital cash, repo, securities lending, and margin management.
The goal of the pilot was to explore potential benefits, including reducing counterparty and settlement risks and optimizing capital.
Goldman has also made venture investments in startups that align with the firm's vision and the development of digital asset market structure, mainly blockchain infrastructure firms.
“We have a portfolio and will invest if or when it makes strategic sense,” Minton said.
On Saturday, former hedge fund manager and well-known television personal Jim Cramer once again flipped bullish on Bitcoin, telling Block Inc.’s CFO and COO Amrita Ahuja, “We are big fans of Bitcoin. We are not against it; we think it’s a great store of value.”
