Goldman Sachs and Bridgewater Bitcoin – Trustnodes

After dipping their toes into CME’s bitcoin futures last year, they’re now also doing options through Galaxy Digital, a crypto asset manager.

“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.”

As a cash settled option, no bitcoins change hand, instead the difference in gains or losses is exchanged in fiat.

Goldman Sachs therefore won’t be custodying BTC, and their clients won’t have actual bitcoin, so there is no holding option.

Making this perhaps more like Blockbuster putting up a flyer on the internet, instead of paywalled movies. Kind of there, but still off the mark, although the option seller will have to hedge with actual bitcoin.

That hedging however won’t be done by Goldman Sachs, so missing out on actual bitcoin services.

But a hedge fund, Bridgewater Associates, might go further. According to Coindesk’s unnamed sources, “the world’s largest hedge fund is planning to back an external [crypto] vehicle… it has no current intention of directly investing in crypto assets itself.”

Making it as vague as it gets, perhaps because they’re still figuring out how to incorporate cryptos into their services with Ray Dalio, Bridgewater’s founder, seemingly only finding out about bitcoin in 2020.

He bought some for himself, but competing at a service level might be difficult because parallel platforms have been created in crypto since bitcoin’s founding.

There’s crypto native payment services, exchanges, OTC desks, and nowadays you have decentralized financial platforms that automate a lot of the banking and asset management services.

There’s still plenty of room for centralized crypto service providers however, but they’re only needed when there’s fiat involvement.

As fiat is traditionally paper based, you need all these Goldman Sachs and even Bridgewaters to move it around and transform it into other traditionally paper based assets, like stocks or bonds.

For bitcoin or other cryptos, an option is just a line of code on a smart contract. It’s not a contractual agreement that requires trust on banks or financial institutions for its execution. More an if then.

Thus, some of these banks or traditional financial service providers seem to be struggling with adapting to a very different asset in substance as well as form.