Less than two months ago Goldman Sachs made history by offering the first Bitcoin-backed loan. Now the Wall Street crypto pioneer continues on its journey into digital assets by launching Ethereum-linked derivative products trading.
According to Bloomberg’s Monday report, the deal took the form of an Ethereum non-deliverable forward contract, so the derivative contract pays out in cash based on the price of ETH.
💡 A forward trade is one where two parties agree to trade a fixed quantity of a product at a future date at a pre-determined price, whether the actual price will be higher or lower. A non-deliverable forward is almost the same, but usually concerns currencies without holding the underlying assets: two parties fix the current exchange rate between two currencies for the future payments. Thus one can hedge currency volatility risks.
The counterparty of the trade was a London-based financial services firm Marex Financial. The trade was organized by Marex Solutions, Marex’s hedging and investment solutions division. Marex Solutions specializes in the manufacture and distribution of customized derivative products on all kinds of assets, including digital ones.
Goldman’s action marks increased participation from major banks looking to embrace cryptocurrencies at a time when the market is still reeling from the collapse of stablecoin TerraUSD (UST) and suffering from a bleak macroeconomic outlook. It is worthwhile mentioning, that Mathew McDermott, the bank’s head of Digital Assets told about their intentions to expand into Ether options and futures back in 2021.
Ethereum derivates have been available on various crypto platforms since 2019. Binance dominates the futures market while niche platform Deribit is an absolute leader in options. According to some estimates the total ETH derivative market cap reaches around 1tn USD. Still, the introduction of ETH derivative by a large American bank takes the market and the underlying asset to a different level.
