Goldman Sachs Offers Clients Access to Ether Through Galaxy Digital

Goldman Sachs Group, Inc. (GS) plans to offer its largest customers access to Ether – the cryptocurrency that powers the Ethereum network – through a fund issued by Galaxy Digital Backgrounds Ltd., according to a Securities and Exchange Commission (SEC) filing.

Key points to remember

  • Goldman Sachs plans to offer access to Ether through a fund issued by Galaxy Digital.
  • Goldman will receive a referral fee for introducing clients to Galaxy’s Ethereum fund.
  • Galaxy also has an agreement to provide liquidity to Goldman’s Bitcoin futures trading.
  • Galaxy continues to grow through strategic acquisitions, positioning itself as a bridge between financial firms and direct crypto investing.

As part of the deal, Goldman will receive an introductory fee for referring clients to Galaxy’s Ethereum institutional fund, according to the March 8 filing. With a minimum investment of $250,000, the 12-month fund has generated more than $50 million in sales to around 30 clients, according to the filing. However, it’s unclear whether any of these streams relate to the investment bank, given that it was not involved in the founding of the fund.

A institutional investor is a person or organization that trades securities in quantities large enough to receive preferential treatment and reduced fees.

Goldman, Galaxy Grow Alliance Crypto

Galaxy, a digital asset and blockchain investment firm, currently provides liquidity for Goldman’s Bitcoin futures trading. In May, Goldman relaunched a crypto trading desk within its Global Currencies and Emerging Markets division after a three-year hiatus. Mathew McDermott, head of digital assets at Goldman, first announced plans to offer Ether futures and options in June 2021 due to growing interest from large investors. “Institutional adoption will continue,” he told Bloomberg at the time.

Goldman’s combination with Galaxy gives investors the opportunity to gain direct exposure to Ethereum as a physical asset rather than through a derivative product, such as futures contracts. Crypto purists say investing directly in the physical asset better reflects the current spot price, while regulators have expressed concerns about the custody and storage of virtual currencies.

Galaxy targets savvy crypto investors

Galaxy’s alliance with Goldman further solidifies its name as a crypto fund targeting institutional investors. The investment firm, led by Mike Novogratz, struck a similar deal with Morgan Stanley (MS), giving the bank’s clients access to its Bitcoin funds that have amassed over $250 million in cumulative sales.

Digital Galaxy was founded by former hedge fund manager turned cryptocurrency investor Michael Novogratz in 2018.

Galaxy continues to grow through strategic acquisitions, acquiring digital asset management companies Vision Hill Group Inc. and Bitgo, Inc. over the past 12 months. While the highly regulated banking industry cannot invest directly in cryptocurrencies, companies like Galaxy provide a bridge between financial firms and direct cryptocurrency investment.

Goldman Sachs and Galaxy have yet to release a statement on the partnership.