Crypto back in favor for Goldman's hedge fund clients

It’s not just the “YOLO” retail traders of the world who are jumping back into cryptocurrency markets. Hedge fund clients of Goldman Sachs are, too. 

“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. “Many of our largest clients are active or exploring getting active in the space.”

Goldman, which launched its crypto trading desk in 2021, currently provides cash-settled Bitcoin option and Ether option trading, in addition to CME-listed bitcoin and Ether futures. It does not trade the underlying crypto tokens. 

“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. 

The majority of demand comes from Goldman’s existing clients, mainly the traditional hedge funds. The bank is also expanding into “a wider universe of clients,” including asset managers, bank clients and select digital asset firms, he said. 

Clients are using crypto derivatives for directional bets, yield enhancement and hedging purposes, he said. 

Bitcoin-related products still command the majority of clients’ focus, he said, though interest for Ether-related products might change, depending on whether Ether ETFs win approval in the US. 

Besides trading, Goldman is active in tokenizing traditional assets using blockchain. The bank launched a digital-asset platform called GS DAP, and most recently participated in a pilot test on a blockchain network that connects banks, asset managers and exchanges. 

Goldman has also made venture investments in startups that are strategic to its 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.