Goldman Sachs Provides Clients Access to Ether Through Galaxy Digital

The fund has generated more than $50 million in sales

Goldman Sachs Group, Inc. (GS) plans to offer its larger clients access to Ether — the cryptocurrency that fuels the Ethereum network — through a fund issued by Galaxy Digital Holdings Ltd., according to a Securities and Exchange Commission (SEC) filing.

Key Takeaways

  • 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 for Goldman’s Bitcoin futures trades.
  • Galaxy continues to expand through strategic acquisitions, positioning itself as a bridge between financial companies and direct crypto investing. 

Under the arrangement, Goldman will receive an introduction fee for referring clients to Galaxy’s institutional Ethereum fund, according to the March 8 filing. With a minimum investment size of $250,000, the 12-month-old fund has generated more than $50 million in sales to around 30 clients, per the filing. However, it's unclear if any of those flows relate to the investment bank, given it was not involved with the fund’s inception. 

An institutional investor is a person or organization that trades securities in large enough quantities that it qualifies for preferential treatment and lower fees.

Goldman, Galaxy Grow Crypto Alliance

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

Goldman’s tie-up with Galaxy gives investors the option to gain direct exposure to Ethereum as a physical asset rather than through a derivative-based product, such as futures contracts. Crypto purists argue that investing directly in the physical asset provides a better reflection of the current spot price, while regulators have expressed concerns over custody and storage of virtual currencies. 

Galaxy Targeting Intuitional Crypto Investors

Galaxy’s alliance with Goldman further cements its name as a crypto fund that targets institutional investors. The investment firm, headed by Mike Novogratz, has a similar arrangement with Morgan Stanley (MS), offering the bank’s clients access to its Bitcoin funds that have amassed over $250 million in cumulative sales.

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

Galaxy continues to expand through strategic acquisitions, scooping up digital-asset management firms Vision Hill Group Inc. and Bitgo, Inc. over the past 12 months. While the highly regulated banking sector can’t invest in cryptocurrencies directly, firms like Galaxy provide a bridge between financial companies and direct crypto investing. 

Both Goldman Sachs and Galaxy have not yet released a statement on the partnership. 

Article Sources
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  1. Securities and Exchange Commission. "Form D."

  2. Securities and Exchange Commission. "Notice of Exempt Offering of Securities."

  3. Bloomberg. "Goldman Expands Trading With Plans for Ether Options."

  4. CoinDesk. "Morgan Stanley Bitcoin Fund Draws $29.4M in 2 Weeks, Filings Show."

  5. Crunchbase. "Galaxy Digital."

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