CRYPTO NEWS
Goldman plans synthetic long/short bitcoinlinked securities and ETNs in Europe The US investment bank is building up its offering to provide clients access to the crypto space.
client transactions, we expect to trade the bitcoin CME future and certain pre-agreed upon bitcoin-linked securities on a principal basis in the near future.’ According to McDermott, liquidity has increased dramatically over the past year. Between April 2020 and April 2021, daily bitcoin dollar spot volume increased from ~US$300m to ~US$1.5bn, and daily CME bitcoin futures volume grew from ~$US200mn to close to ~US$2bn. ‘That’s a very clear indication of the inflow of institutional demand into this market, which has only just begun,’ he said. ‘But even though liquidity has increased, it’s still difficult for institutions to gain access to the market, which remains quite fragmented.’
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oldman Sachs Group will offer prime brokerage clients seeking exposure to the crypto market the ability to go synthetically long/short bitcoin-linked securities and exchange-traded notes (ETNs) in Europe, according to Matthew McDermott (pictured), head of digital assets at the US investment bank. ‘We’re also looking into offering lending structures in and around the crypto space to corporate clients as well as structured notes,’ he said in the latest iteration of the bank’s research report Crypto: A New Asset Class. ‘From a wealth management perspective, we are gearing up to offer access to cryptocurrencies, specifically bitcoin, via fund or structured note-like products.’ He acknowledged that it is early days in the bank’s engagement in the crypto market and it is only just starting to offer its clients access to the crypto space as ‘the regulatory landscape remains in flux’. ‘We’re currently transacting non-deliverable forwards, which we cash settle, and CME futures on bitcoin and ether, the latter on an agency basis for now,’ he said. ‘To help facilitate
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Adoption constraints remain mostly around mandate limitations as for corporates increased involvement often depends on whether their board feels such involvement makes sense given the nature of the company and its objectives. ‘Some investment funds and asset managers don’t have the authority to invest a portion of their portfolios in crypto,’ said McDermott. LIMITATIONS The second constraint is the ease of access - how easily can clients gain exposure to the market, if the liquidity sufficient to meet their needs, and if are they comfortable enough with the custody and security aspects of managing these assets. The third constraint, according to McDermott, is whether having crypto exposure is the right thing to do and makes sense for their portfolios, balance sheets etc. However, as ‘evidenced by the increased inflows, more and more entities are becoming comfortable with having some exposure to the crypto space,’ said McDermott. A recent survey by Goldman of 328 chief investment officers and chief financial officers, representing nearly half the US$26 trillion global insurance industry, indicated that six percent of respondents were invested in crypto or considering doing so.
