Goldman Sachs reportedly eyes crypto derivatives markets with FTX integration

by Lillian Wagner
Goldman Sachs reportedly eyes crypto derivatives markets with FTX integration

Goldman Sachs, one of the leading investment banks in the United States is reportedly trying to onboard some of its derivatives products into FTX.US crypto derivatives offerings.

Goldman Sachs has been in talks with FTX over regulatory and public listing help, and aims to expand into crypto derivatives offering by leveraging some of its own derivatives tools and services, reported Barron’s.

FTX.US, the U.S. subsidiary of global cryptocurrency exchange FTX is currently seeking to offer brokerage services for its derivatives offerings. This would allow the crypto exchange to handle the collateral and margin requirements internally rather than depending on “futures commission merchants” (FCMs). FTX.US president Brett Harrison said:

“We have multiple FCMs already committed to integrating technologically with the exchange. There are several large ones you can probably name.”

The U.S. Commodity Futures Trading Commission (CFTC) has sought public comments on the requested amendment from the crypto exchange. The chief regulatory body also believes that FTX’s proposal warrants scrutiny as it would lead to a monopoly by large investment banks such as Goldman.

Related: FTX executive Wetjen calls CFTC application an opportunity for the agency to innovate

According to people familiar with the matter, the integration of Goldman Sachs derivatives services would offer “trading futures directly, introducing clients and acting as an on-ramp to the exchange, or providing capital top-ups for clients.”

FTX has argued that an integrated brokerage model would help in making the market more stable and free. In a recent roundtable discussion with the CFTC, CEO Sam Bankman-Fried fielded several questions about crypto derivatives and FTX’s proposal to integrate its own FCM.

Crypto derivatives trading has been a topic of debate for quite some time, with many European and even the U.S. prohibiting most of the crypto exchanges from offering leveraged trading. Binance had to shut its derivatives offerings in several European countries post regulatory interventions.

On one hand, CFTC has called for greater scrutiny of FTX’s amendment demand, while on the other, FTX argues that an integrated brokerage model would help them calculate calculates margin requirements every 30 seconds, rather than waiting until the next day to liquidate positions.