Goldman Sachs digital assets chief announces plans for three tokenization projects by the end of the year.
Goldman Sachs is getting ready to join its peers in traditional finance who are diving deeper into crypto, such as BlackRock with its Bitcoin ETF and Fidelity’s trading platform. According to digital assets global head Mathew McDermott, the 150-year-old banking giant is experiencing a surge in client interest.
McDermott revealed that Goldman Sachs plans to enhance its crypto offerings, including ventures into the popular sector of tokenization. Tokenization involves issuing “real-world assets” like money market funds and real estate holdings on public or private blockchains. Goldman Sachs is set to launch three tokenization projects by the end of the year with major clients, the first of which will be in the U.S.
While BlackRock and Franklin Templeton are also exploring tokenization, McDermott emphasized the importance of creating products that investors desire. To gather insights, the bank recently hosted a digital assets summit in London with over 500 clients in attendance. McDermott stated, “There’s no point doing it just for the sake of it. The definite feedback is, this is something that actually will change the nature of how they can invest.”
Differing views
Following a harsh crypto winter triggered by the collapse of FTX, markets saw a resurgence this year, fueled by the launch of Bitcoin ETFs in January. Goldman Sachs played a crucial role in these ETF offerings by serving as an authorized participant, aiding in the redemption and creation mechanism for the investment vehicles, including BlackRock’s IBIT ETF.
McDermott described the ETFs’ launch as a period of “renewed momentum in crypto,” but this sentiment is not universal within the bank. Notably, the chief investment officer for Goldman Sachs Wealth Management, Sharmin Mossavar-Rahmani, expressed skepticism towards crypto as an investment asset class in an April interview with the Wall Street Journal.
Despite internal differences, Goldman Sachs remains active in crypto from an institutional perspective, engaging in cash-settled crypto derivatives trading and participating in the ETF markets. McDermott highlighted the bank’s focus on broadening its product suite based on client demand.
Tokenization remains central to Goldman Sachs’ strategy, with initiatives like bond issuance with the European Investment Bank and the tokenization of a sovereign green bond for the Hong Kong Monetary Authority. The bank also launched the Goldman Sachs Digital Asset Platform in 2023 to enable asset tokenization.
BlackRock’s treasury fund BUIDL, operating on Ethereum, is a prominent tokenization launch this year. While BlackRock targets retail customers, Goldman Sachs prioritizes institutional clients and plans to work exclusively with private blockchains due to regulatory constraints. The bank aims to establish marketplaces for tokenized assets, improve speed, and expand the range of assets available as collateral.
McDermott did not disclose specifics about the three tokenization projects set to debut this year but mentioned that one focuses on the U.S. fund complex, while another pertains to debt issuance in Europe.
Looking ahead to the U.S. presidential election and potential regulatory changes in the crypto space, McDermott noted that Goldman Sachs’ opportunities could grow, potentially allowing the firm to hold spot crypto assets and engage in execution and sub-custody services, pending approval.
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