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Goldman Sachs to Launch Three Tokenization Projects by Year-End, Digital Assets Chief Says: ‘Renewed Momentum in Crypto’
As its peers in traditional finance push deeper into cryptocurrencies, including BlackRock Bitcoin ETFs and loyalty trading platform—Goldman Sachs Consulting Firm is preparing to make a move of its own. This comes as the 150-year-old banking giant is seeing a surge in customer interest, global head of digital assets Mathew McDermott told Fortune.
McDermott says Goldman Sachs plans to expand its cryptocurrency offerings, including ambitious ventures into the hot space of tokenization, in which so-called “real-world assets” like money market funds and real estate holdings are issued on public or private blockchains. According to McDermott, Goldman Sachs is poised to launch three tokenization projects with major clients by the end of the year, including the first in the U.S.
While Black rock and Franklin Templeton are also testing the waters of tokenization, McDermott said the key to success will be to create products that investors want, which is why the bank recently held a digital assets summit in London attended by more than 500 clients. “There’s no point in doing it just for the sake of doing it,” he told Fortune. “The ultimate feedback is that this is something that will actually change the nature of how they can invest.”
Different points of view
After a deep crypto winter triggered by the FTX crash, markets have roared back this year, buoyed by the January launch of Bitcoin ETFs. According to financial filings, Goldman Sachs has taken a key role in ETF offerings by acting as an authorized participant, meaning it would assist with the redemption and creation mechanism for investment vehicles (including BlackRock’s IBIT ETF).
McDermott described the ETF launch as a “renewed momentum in cryptocurrencies,” though his bank doesn’t share that view. In April, the Wall Street Journal published an interview with Sharmin Mossavar-Rahmani, chief investment officer at Goldman Sachs Wealth Management, in which the finance veteran said she doesn’t view cryptocurrencies as an investment asset class and hasn’t seen any interest from clients.
“The nice thing is, for an institution our size, there are different opinions,” McDermott told Fortune. He said Goldman Sachs is more active in cryptocurrency from an institutional perspective, including cash-settled crypto derivatives trading on behalf of clients, along with its involvement in ETF markets. “We’ve continued to see, certainly this year, an increase and a broadening of the suite of products that clients would like to see available,” he said.
Tokenization remains a central part of the bank’s plans. Goldman Sachs has dabbled in the space, including working on a bond issuance with the European Investment Bank in 2022 and tokenizing a sovereign green bond for the Hong Kong Monetary Authority in 2023, as well as launching the Goldman Sachs Digital Asset Platform in 2023 to facilitate asset tokenization.
The largest tokenization launch this year was BlackRock’s BUIDL treasury fund, which hit $500 million on Monday and operates on Ethereum, a public blockchain. McDermott said BlackRock, along with similar funds from Franklin Templeton, are targeting a retail client base, while Goldman Sachs is more institutional-focused and would only work with private blockchains due to regulatory restrictions. He said the bank’s goal is to create true markets for tokenized assets, as well as deliver improvements in speed and the types of assets that can be used as collateral.
McDermott declined to provide specifics on the three tokenization projects that will launch this year, but said one is focused on a U.S. fund complex and another on debt issuance in Europe.
With the U.S. presidential election and a potential shift in the government’s regulatory approach to cryptocurrencies just months away, McDermott said the bank’s opportunities in the space could expand, including the ability to hold spot crypto assets. “There may be other things that we as a firm would naturally be interested in, subject to approval, doing, like execution and maybe sub-custody,” he told Fortune.