Goldman Sachs partners with Galaxy Digital for bitcoin futures trading

Bitcoin (Image: Reuters)

Goldman Sachs has begun trading bitcoin futures with cryptocurrency merchant bank Galaxy Digital.

New York-based Galaxy Digital, founded by Mike Novogratz, works with over 300 institutional trading counterparties.

"The addition of Galaxy as a liquidity provider follows Goldman Sachs' successful execution of its first cryptocurrency trades and formalised set-up of its bitcoin desk last week, two months after the US bank announced that it would re-enter the cryptocurrency market amidst growing demand from institutional clients," Galaxy Digital said in a statement.

As cryptocurrencies, particularly bitcoin, gain popularity among institutional investors, investment banks have been working towards catering to the demands of their clients.

Galaxy co-president Damien Vanderwilt told CNBC that this is the first time that Goldman Sachs used a digital assets firm as a counterparty after setting up a cryptocurrency desk in May.

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"There's a whole dynamic with the major banks that I've seen time and time again: safety in numbers," Vanderwilt told the news channel.

"Once one bank is out there doing this, the other banks will have (fear of missing out) and they'll get on-boarded because their clients have been asking for it."

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Goldman Sachs has tied up with Galaxy because the highly regulated banking industry cannot handle bitcoin directly, he said.