The Goldman Sachs proposed partnership if proven to be true will form very good leverage for FTX as it will garner the backing of a big industry giant.
By Godfrey Benjamin
Updated
3 mins read
American multinational investment bank and financial services company Goldman Sachs Groups Inc (NYSE: GS) is reportedly planning to dive into crypto derivatives offering in partnership with FTX Derivatives Exchange. According to the details shared by sources close to the matter, the banking giant is looking at options by which it will onboard some of its derivatives products into FTX.US crypto derivatives offerings.
FTX and its US subsidiary are two of the most dominant derivatives offering outfits in the digital currency ecosystem and several reports have attested to the fact that Goldman Sachs has been exploring avenues to do business with the company. While earlier reports have it that Goldman Sachs’s interest in crypto was hinged on helping the crypto firm with its public listing efforts, Barron’s reported that the investment banking giant is looking at leveraging its own derivatives tools in the new space.
While the modalities of the partnership is not fully defined, sources close to the matter said the Goldman Sachs partnership will offer “trading futures directly, introducing clients and acting as an on-ramp to the exchange, or providing capital top-ups for clients.”
FTX has been pushing the Commodity Futures Trading Commission (CFTC) to grant its subsidiary LedgerX a designation as derivatives clearing organization (DCO). This new recognition will offer it the permission to clear derivatives without relying on Futures Commission Merchants (FCMs) that are licensed by the CFTC.
This request from FTX is a one-of-its-kind comment and has been put up for public commentary by the CFTC. In the request for comments published in March, the CFTC said:
“FTX currently operates a non-intermediated model and clears futures and options on futures contracts on a fully collateralized basis. In its request for an amended order of registration, FTX proposes to clear margined products for retail participants while continuing with a non-intermediated model.”
The Goldman Sachs proposed partnership if proven to be true will form very good leverage for FTX as it will garner the backing of a big industry giant.
Should the CFTC grant FTX’s proposal, it will require a brokerage service, and the offering from Goldman Sachs will come in very handy in various aspects. While the subject of crypto derivatives comes with many upheavals in several jurisdictions, FTX has managed to thrive through strict adherence to extant laws. It is also looking at acquiring regulated brokerages to further give is a good leverage
Considering most cryptocurrency exchanges are unable to offer derivatives products at a scale that FTX is projecting, securing the DCO license or allowance will give it a very massive head start amongst its peers. Besides setting a precedent that other trading platforms will leverage to secure their own licenses, the move will give FTX direct access to new markets, thus bolstering its business model on all fronts.
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Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
