Galaxy Digital’s big OTC trade cements crypto’s institutional status

The announcement by Mike Novogratz’s Galaxy Digital Holdings that Goldman Sachs implemented its first OTC crypto transaction on Galaxy’s platform has been seen as a harbinger of greater institutionalization in the digital assets space.

Galaxy’s trading unit facilitated and executive the first OTC crypto transaction with Goldman Sachs in the form of a Bitcoin non-deliverable option or NDO. Officials said that the trade was the first transaction of this type by a major U.S. bank and is a continuation of the Goldman’s partnership with Galaxy Digital in deepening its crypto capabilities. This follows Goldman Sachs’ first CME Group Bitcoin futures transaction last year.

Damien Vanderwilt, co-president and head of global markets at Galaxy Digital, said that the transaction will open the door for other banks considering OTC as a conduit for trading digital assets. “Goldman’s continuing trust in us is a testament to Galaxy’s expertise and ability to meet the evolving demands by institutions as crypto solidifies itself as the fifth asset class,” he added.

For institutional investors, such as pension funds, it is very much an emerging asset class with small U.S. public pensions dipping a toe in the water. For example, the Houston Firefighters’ Relief and Retirement Fund last year purchased Bitcoin and Ether reportedly worth $25 million.

Investors eyeing the utility of cryptocurrency in recent weeks can look no farther than Ukraine, where digital assets in conjunction with social media is part of an overall defense strategy.

As for Galaxy, its trading platform provides liquidity in over 100 digital assets. The firm said it works with over 690 institutional trading counterparties and has added 43 new relationships in the third quarter of 2021. The backbone of the platform is Galaxy’s relationships with spot and futures exchanges as well as with digital asset exchanges, custodians and fiat banking partners. This affords the firm the capability to move capital and assets securely and efficiently, officials say.

“We are pleased to have executed our first cash-settled crypto currency options trade with Galaxy,” said Max Minton, Asia Pacific head of digital assets for Goldman Sachs. “This is an important development in our digital assets capabilities and for the broader evolution of the asset class.”

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