Nomura Starts Trading Crypto Derivatives, Joining Rivals Goldman, JPMorgan

Japanese investment bank Nomura began trading cryptocurrency derivative contracts this week, joining rivals including Goldman Sachs (GS) and JPMorgan (JPM) in giving clients a way to access the crypto market.

Nomura launched over-the-counter cryptocurrency derivatives with bitcoin (BTC) non-deliverable forwards and non-deliverable options for clients in Asia out of Singapore, according to an emailed statement from the bank.

“We also have the capability to offer bitcoin futures and options trading, with such trades executed this week on the CME with Cumberland DRW, marking the first digital asset trades for Nomura,” Rig Karkhanis, the bank’s head of global markets for Asia ex-Japan, said in the statement.

The introduction coincides with a highly volatile period in the crypto market, set off by the dramatic collapse of Terra’s LUNA stablecoin and decentralized finance platform. The total crypto market cap has dropped about 30% this week.

“Options enable investors to trade volatility directly and protect against downside risks,” Karkhanis said.

The last year has seen banks kowtow to client demand and start to trade crypto, albeit at arms length without touching spot markets. Goldman, the first Wall Street bank to begin trading crypto futures, has also announced using bitcoin as collateral for dollar loans.

“Digital assets have grown from a niche industry into a $1.5 trillion asset class, but many investors still don't have an avenue to get exposure to the space,” Paul Kremsky, the head of relationship management at Cumberland DRW, said in an email.

Nomura was one of the first banks to explore custody of crypto assets, joining the Komainu custody joint venture alongside fund manager CoinShares and custody specialist Ledger, in June 2020.

The Nomura Research Institute, an economic consulting arm of the bank, launched a crypto-asset index tracking the Japanese cryptocurrency market in 2020.