Bitcoin futures trading may soon be possible thanks to Goldman Sachs’ negotiations with FTX.
According to Barron’s story, Goldman Sachs is considering partnering with cryptocurrency exchange FTX to provide futures trading in bitcoin and other cryptocurrencies.
FCMs have already agreed to integrate with the exchange “via technology,” Brett Harrison, the head of FTX’s U.S. branch, said in an interview with Barron’s. “I’m sure you can think of a few significant ones.”
For the Commodities Futures Trading Commission (CFTC), the FTX exchange wants to modify its licence to enable it to act as both a cryptocurrency exchange and a middleman for leveraged derivatives trading, according to media reports (FCM). Goldman Sachs, for example, is presently playing a part in this.
This indicates a dramatic shift in the way financial institutions conduct counterparty transactions. Previously, they would have relied on leverage to facilitate these transactions. According to the research, FTX seems to be taking some of the market shares away from Wall Street’s traditional direct competitors.
If FTX succeeds in this attempt, it threatens the elimination of intermediaries such as Goldman by supplying derivatives in-house, rather than relying on the collaboration of another financial institution to provide these products. Since the Futures Industry Association, which represents many of the potential intermediaries impacted by FTX, is concerned that FTX might expand beyond cryptocurrencies and into other markets, there has been friction.
An on-ramp for Goldman to use the FTX exchange may be offered as part of the FTX integration, which might involve direct trading of futures contracts, the intermingling of clients, or the provision of capital top-up (stock options to enhance equity holdings) to customers.