Goldman Sachs Gears up to Launch Ethereum Futures and Options Trading

The industry giant joins a list of influential companies and figures that have given their support to the original DeFi chain.

By
Chung Yee
on
June 15, 2021
Category:
Blockchain News

Ethereum Price Gets a Boost

The head of Digital Assets for Goldman Sachs, Mathew McDermott, confirmed in an interview on June 14th with Bloomberg that they will be adding futures and options trading for Ethereum. The banking giant is also looking at a potential role as an intermediary for Ethereum’s Exchange Traded Note (ETN) Trading. 


Banking and legacy financial institutions such as Goldman Sachs are slowly recognizing that cryptocurrencies are gaining attention amongst investors. On May 24th, Yahoo Finance! reported that Goldman Sachs officially declared that Bitcoin is an investable asset. 

The focus of major institutional players in the past has always been on Bitcoin, but it seems as if DeFi networks are beginning to prove their long-term value to these financial institutions. While it was feared that DeFi would not survive market volatility, Ethereum has proven that it has similar staying power to BTC.

McDermott acknowledged that interest in the second largest cryptocurrency has not waned despite the current dip and was optimistic that Ethereum products will be increasingly sought after. The news about the ETH implementation comes swiftly on the heels of Goldman Sachs’ surprising turnaround on their crypto policy. On May 6, 2021, Coinspeaker reported that Goldman Sachs announced that they are prepared to offer Bitcoin derivative products to its clients. With its expansion into Ethereum, it seems like financial giants like Goldman Sachs, JP Morgan and Morgan Stanley are starting to warm up to cryptocurrencies as a whole - not just Bitcoin. 


Ethereum Gaining Wider Recognition      

Yahoo Finance reported that on April 28, 2021, JP Morgan published a note to its investors explaining why Ethereum is outperforming Bitcoin. It cited better liquidity and higher turnover on the blockchain as reasoning for its outperformance. In other words, the flurry of activities on the Ethereum blockchain is evidence of its utility. 

Ethereum is a platform capable of performing multitudes of tasks because codes can be written and deployed on the Ethereum blockchain, unlike the static Bitcoin chain. It is the first smart contract platform that allows for permissionless deployment and automation of transactions. Ethereum is the first platform that introduced Decentralized Finance (DeFi for short), which has contributed to its popularity.

However, there are a few notable drawbacks which have hampered its rate of adoption. The most aggravating two issues have been high transaction (or gas) fees along with network congestion. These two major problems have given rise to the birth of new competitors such as the likes of Binance Smart Chain (BSC), Polkadot ($DOT), Solana ($SOL), Zilliqa ($ZIL) and Elrond ($EGLD). These chains seek to improve upon the issues Ethereum faces, with varying levels of success based on project quality. Despite some of the positive attributes of these chains, Ethereum still reigns supreme in terms of market shares.


Maintaining Dominance in the Smart Contract Category

The notoriety of Ethereum among financial giants has been growing more and more prominent. There are some snags, such as slow transactions and high fees, that have stunted its momentum. The latest upgrade to the platform, the Berlin hard fork has reduced the gas fee (transaction costs) but it is still relatively high compared to its competitors.  However, a series of planned upgrades which includes the London hard fork and the Shanghai hard fork will help the blockchain eliminate these issues. It is this dedication to improvement that has caused the blockchain to catch the eye of companies like Goldman Sachs.

Ethereum is by far the largest blockchain community with a sizable amount of projects, developers and investors in its ecosystem. This makes Ethereum an attractive investment portfolio and financial institutions like Goldman Sachs now recognize this potential. Their addition of futures and options trading for Ethereum could just be the start of a flourishing partnership.

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Chung Yee

Chung Yee has a legal background and has been involved in research works for the legal and compliance industry. Writing is his passion, centered on topics such as the blockchain and finance.

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