Crypto Derivatives Spur Regulator Warning as Goldman Dives In

Banks should be careful before getting involved in trading Bitcoin-linked futures and other crypto-derivative products, acting Comptroller of the Currency Michael Hsu said.

Big banks, including Goldman Sachs Group Inc., are looking to make markets in crypto-linked derivative products for their clients even though global financial regulators are still evaluating capital levels that would be needed to safely manage crypto exposures, Hsu said.

Crypto-linked derivatives pose unique problems—including limited price histories, miscalculated hedging and heightened wrong-way risks—that banks need to account for before getting deep into crypto derivatives, Hsu said Thursday at an American Bankers Association risk conference.

“Before banks ...