- Goldman Sachs is getting ready to take a stand as its counterparts in traditional finance—such as Fidelity’s trading platform and BlackRock’s Bitcoin ETF—move further into the cryptocurrency space.
- This coincides with a significant increase in client interest in the 150-year-old banking giant, according to Fortune’s interview with digital assets worldwide head Mathew McDermott.
According to McDermott, Goldman Sachs plans to increase the range of cryptocurrencies it offers. These plans include bold efforts in the tokenization space, which is currently quite popular and involves issuing so-called real-world assets on public or private blockchains, such money market funds and real estate holdings. By the end of the year, Goldman Sachs plans to introduce three tokenization projects with significant clients, including its first in the United States, according to McDermott.
The bank recently hosted a digital assets summit in London that was attended by over 500 clients, as McDermott stated that producing products that investors desire will be the key whereas Franklin Templeton and BlackRock are also experimenting with tokenization, to success. He informed Fortune that there was no use in doing it just for fun. Feedback is unambiguous: this will genuinely alter the way they can make investments.
Contrasting opinions
With the FTX collapse igniting a deep crypto winter, markets rebounded this year, helped along by the January introduction of Bitcoin ETFs. Financial documents indicate that Goldman Sachs assumed a significant role in the ETF offers by acting as an authorized participant, which meant it would assist in the investment vehicles’ stages of establishment and redemption (involving BlackRock’s IBIT ETF).
Although not everyone at his bank shares McDermott’s opinion, he saw a renewed momentum in cryptocurrency with the introduction of the ETFs. The chief investment officer of Goldman Sachs Wealth Management, Sharmin Mossavar-Rahmani, stated in an April Wall Street Journal interview that she does not consider cryptocurrency to be an asset class for investments and that she has not seen any interest from clients.
According to McDermott, Fortune, “the nice thing about an institution of our size is there are differing views.” According to him, Goldman Sachs is more involved in the cryptocurrency space institutionally than other firms are. It trades cash-settled crypto derivatives for customers and is also involved in the ETF markets. According to him, we’ve seen an increase and widening of the product suite that customers would want to have offered, at least this year.
Tokenization is still a key component of the bank’s strategies. In 2022, Goldman Sachs worked on a bond issuance project with the European Investment Bank. A sovereign green bond issued by the Hong Kong Monetary Authority in 2023 was tokenized by Goldman Sachs. In 2023, the Goldman Sachs Digital Asset Platform was established to enable the tokenization of assets.
BlackRock’s Treasury Fund BUIDL, which runs on the public blockchain Ethereum and hit $500 million on Monday, is the largest tokenization launch of the year. According to McDermott, BlackRock and related funds from Franklin Templeton target the retail market, but Goldman Sachs is more institutionally oriented and would only engage with private blockchains because of legal constraints. According to him, the bank wants to enhance speed and the kinds of assets that may be pledged as security in addition to developing real markets for tokenized assets.
The three tokenization projects that are scheduled to begin this year are centered on the fund complex in the United States and debt issuance in Europe, according to McDermott, who declined to offer specifics.
A few months out from the US presidential election and a possible shift in the government’s stance on cryptocurrency regulation, according to McDermott, the bank may see an increase in prospects in the field, including the ability to store spot cryptocurrency assets. According to him, there might be additional things like execution and possibly sub-custody that we as a firm would naturally be interested in doing, subject to approval, he told Fortune.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
