June 21, 2021: -Goldman Sachs’s efforts to help hedge funds and other big institutional clients wager on bitcoin have taken a step closer. The bank has started trading bitcoin futures with Galaxy Digital, the crypto investment firm founded by Mike Novogratz ; According to CNBC.

According to Damien Vanderwilt, co-president of Galaxy and head of its global market, the trades represent the first time Goldman has used digital assets firm as a counterparty since the investment bank set up its cryptocurrency desk last month.

The moves by Goldman, the preeminent global investment bank, may reverberate on Wall Street and beyond as banks are facing pressure from clients who want exposure to bitcoin. By being the first central U.S. bank to begin trading cryptocurrency, Goldman is essentially giving other banks cover to start doing so as well, said Vanderwilt, a former Goldman partner who joined Galaxy in the previous year.

On Friday, Galaxy was scheduled to announce that it will serve as Goldman’s “liquidity provider,” Wall Street jargon for a company that provides quotes for buy and sell orders on CME Group bitcoin futures.

According to Vanderwilt, Goldman is leaning on Galaxy to access the crypto world because the highly regulated banking industry can’t handle bitcoin directly.

But nothing prevents banks from dealing in financial wagers tied to the price of the underlying coins, and so that is where Wall Street is starting its crypto journey. There are parallels in the commodities realm, in which banks trade exposure to hogs or corn without owning the physical asset, he said.

Banks will offer clients ways to wager on bitcoin by making use of derivatives, taking a page from the world of established finance, he said. Including arbitrage bets related to the price gap amid the two, CME bitcoin futures and bitcoin itself, relative value trades between bitcoin and ethereum, and the creation of bitcoin structured notes.

The steps of Goldman in cryptocurrency trading are happening even though sustained skepticism toward bitcoin from another side of the firm. Most notably, the chief investment officer for the bank’s wealth management has called bitcoin a bubble that isn’t appropriate for investors.