Goldman Sachs is planning to provide customers with access to Ether, the native crypto on the Ethereum blockchain. The giant financial institution will provide this through a fund released by Galaxy Digital Holdings, as seen in the Securities Exchange Commission (SEC) filing.
This arrangement will see Goldman receive an introduction fee for referrals to Galaxy’s Ethereum Fund. With the least investment size being USD 250,000, the fund generated more than USD50 million from only 30 clients. However, it was unclear whether the flows were related to the bank because it was not involved when the fund was originally conceived.
Goldman and Galaxy Join Hands, Grow Crypto Alliance
Galaxy, a respected digital asset and blockchain investment firm, provides liquidity for Goldman’s Bitcoin futures trading. Last year in May, Goldman re-introduced a crypto trading desk in its Global Currencies and Emerging markets unit following a long absence of three years. In June, a month later, Mathew McDermott, the team leader of digital assets at Goldman, indicated that they preferred Ether Futures and options trading because of the growing interest. He added that because of this, institutional adoption is expected to grow.
The tie between Galaxy and Goldman’s provides investors the option to enjoy direct exposure to ETH as an asset (physical) and not derivative-based contracts. For crypto purists, direct investing in physical assets offers a better reflection of the trending price. However, there are concerns by regulators about the storage and custody of cryptos.
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Galaxy Looking Forward to Attract Institutional Clients
The alliance between Galaxy and Goldman has strengthened the resolve to reach institutional clients. Under the leadership of Mike Novogratz, the investment firm has adopted a similar model of operation to Morgan Stanley to offer clients access to Bitcoin funds. These funds grew to more than USD 250 million in cumulative sales.
Galaxy is expanding via strategic acquisitions and has also scooped firms such as Bitgo and Hill Group Inc in the last 12 months. Although regulated financial organizations, such as banks, are not yet able to invest directly into cryptos, companies like Galaxy are offering the required bridge for interested clients.