Cryptocurrency Merchant Bank Galaxy Digital Moves Into Options Contracts

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Cryptocurrency merchant bank Galaxy Digital is moving into the cryptocurrency derivatives arena.

Popularly known for its founder, the ex-hedge fund manager and former Goldman Sachs partner Michael Novogratz, Galaxy Digital has confirmed with The Block that the crypto bank is pivoting toward cryptocurrency options contracts.

Galaxy Digital

In traditional finance, such a contract provides a buyer with the right to buy or sell an asset at a specific price. In Galaxy’s case, the new offering will cover top cryptocurrencies. Yoshi Nakamura, the firm’s director of global business development, commented that various cryptoeconomy stakeholders, e.g. miners, were eager to use the derivatives to mitigate the risk of price volatility.

The institutional-minded service arrives at a time when bigger enterprises are starting to increasingly enter the cryptoeconomy. For example, this week it was revealed JP Morgan analyst Nikolaos Panigirtzoglou had recently issued a report saying institutional activity around crypto had picked up steam. He wrote:

“[The data suggests] that market structure has likely changed considerably since the previous spike in Bitcoin prices in end-2017 with a greater influence from institutional investors.”

Likewise, in May the Fidelity Center for Applied Technology (FCAT), a wing of Fidelity Investments, published a study it commissioned that found that 40 percent of institutional investors were open to investing into cryptocurrencies at some point in the next 10 years.

In that context, firms like Galaxy Digital, Bakkt, and Fidelity’s crypto arm, Fidelity Digital Assets, are positioning themselves to be among the biggest players in the arena. On the news of the FCAT study, Fidelity Digital Assets president Tom Jessop suggested the winds of digital change were blowing:

“More institutional investors are engaging with digital assets, either directly or through service providers, as the potential impact of blockchain technology on financial markets – new and old – becomes more readily apparent.”

As such, it’s a ripe time for future-minded players to prepare for a general uptrend. For its part, Galaxy is certainly eyeing greener pastures. The firm faced $273 million in losses last year.

In Other Institutional News: Say Hello to Bakkt Pay?

Bakkt, the forthcoming cryptocurrency exchange for retail and institutional investors that’s being backed by New York Stock Exchange owner-operators ICE, is seemingly hard at work on a cryptocurrency wallet called Bakkt Pay.

That’s per the platform’s hiring of Chris Peterson, a user experience expert with a previous stint at Google. An anonymous source close to the matter has said Peterson is likely working on a mobile app, i.e. Bakkt Pay.

The app will presumably work like Coinbase’s iOS and Android apps, offering consumers the ability to easily buy, sell, send, and receive cryptocurrencies from their Bakkt accounts.

The revelation comes after the firm’s chief operating officer Adam White confirmed earlier this month that Bakkt would be conducting “user acceptance testing” for its phsyically-settled bitcoin futures product on July 22nd. In April, the startup’s backers ICE acquired crypto custodian company Digital Asset Custody Company to boost Bakkt’s custodial operations.

Crypto Derivatives Plays on the Rise

Cryptocurrency derivatives are seemingly becoming all the rage.

For example, the CME Group’s bitcoin futures offering broke activity records last month, as traders speculated on the BTC price in unprecedented numbers. Once Bakkt’s bitcoin futures go live, the products should only become that much more popular.

Another thread worth watching is the advance of cryptocurrency derivatives platform ErisX. In April, the Chicago-based platform launched cryptocurrency spot market services. The exchange is also reportedly looking at launching crypto futures of its own.

Moreover, one of the more understated headlines so far in 2019 has been the fact that cryptocurrency exchange giant Binance is working on unveiling its own crypto derivatives marketplace. Watch out, BitMEX!


William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Bitcoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

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