In June last year, Deutsche Borse announced the introduction of Bitcoin ETN on its Xetra exchange platform. An ETN is a debt security that checks the performance of underlying assets. In its recent strategy to expand its offerings into the crypto market, Deutsche Borse has expanded its Xetra exchange by introducing Ethereum ETN. The Xetra exchange platform is attractive to institutional investors looking to avoid risk during transactions.
Goldman Sachs has taken a different approach from Deutsche Borse. Goldman has extended their offerings to private wealth investors by offering Bitcoin futures and non-deliverable forwards. Goldman also seeks to unveil a Bitcoin exchange-traded fund (ETF) in their future plans. This strategy will enable Goldman’s investors to invest more in risky crypto assets.
What has caused this new development?
In recent months, the demand and prices for Bitcoin have steadily increased. The cryptocurrency market cap reached a record high of over $2 Trillion in April 2021. To this end, many retail and institutional investors are looking for a way that they can reap returns from the booming crypto market. This is why significant banks such as Goldman Sachs and Deutsche are expanding their services in crypto assets.
Due to market volatility caused by Covid-19, investors are not turning to crypto-assets to hedge against inflation. By banks avoiding venturing into the crypto market, their clients miss out on being part of a revolutionary market space that comes with high returns. To maintain their private wealth client base, Deutsche Borse and Goldman Sachs have to change their operations by introducing more crypto trading options.
While these banks are waiting for approval to extend their service offerings from the U.S. Securities and Exchange Commission, one thing remains clear, the ground is shifting in the financial sector. More institutional investors are being attracted to the crypto market, and banks have to keep up with the change.