Markets
Goldman Sachs to Launch Three Tokenization Projects by Year-End, Digital Assets Chief Says: ‘A New Momentum in Crypto’
As its traditional finance peers delve deeper into crypto, including BlackRock Bitcoin ETF and Fidelity Exchange platform—Goldman Sachs is preparing to do the same. It comes as the 150-year-old banking giant sees a surge in customer interest, Mathew McDermott, global head of digital assets, told Fortune.
McDermott said Goldman Sachs plans to expand its cryptocurrency offerings, including by launching ambitious initiatives in the booming tokenization sector, where “real-world assets” such as money market funds and real estate holdings are issued on public or private blockchains. Goldman Sachs is expected to launch three tokenization projects with major clients by the end of the year, including its first in the U.S., McDermott said.
While Black rock and Franklin Templeton are also testing the tokenization waters, McDermott said, the key to success will be creating products that investors want, which is why the bank recently hosted a digital asset summit in London attended by more than 500 clients. “There’s no point in doing it just for the sake of it,” he told Fortune. “The feedback is clear: This is something that’s really going to change the nature of how they can invest.”
Divergent points of view
After an intense crypto winter sparked by the FTX collapse, markets have made a comeback this year, boosted by the January launch of Bitcoin ETFs. Goldman Sachs has taken a leading position in the cryptocurrency market, according to financial filings. key role in ETF offerings by acting as an authorized participant, meaning it would assist in the redemption and creation mechanism of investment vehicles (including for BlackRock’s IBIT ETF).
McDermott described the ETF launch as a “new impetus for crypto,” though that view is not shared by his bank. In April, the Wall Street Journal published an interview with Sharmin Mossavar-Rahmani, chief investment officer of Goldman Sachs Wealth Management, where the finance veteran said she does not view crypto as an investment asset class and has not seen interest from clients.
“The nice thing is that for an institution of our size, there are divergent views,” McDermott told Fortune. He added that Goldman Sachs is more active in the cryptocurrency space from an institutional perspective, including trading cash-settled cryptocurrency derivatives on behalf of clients, as well as participating in ETF markets. “We’ve continued to see, certainly this year, an increase and a broadening of the range of products that clients would like to see available,” he said.
Tokenization remains a central part of the bank’s plans. Goldman Sachs has been exploring the area, including working on a bond offering 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 biggest tokenization launch this year was BlackRock’s BUIDL treasury fund, which hit $500 million on Monday and runs on Ethereum, a public blockchain. McDermott said BlackRock, along with similar funds from Franklin Templeton, is targeting retail clients, while Goldman Sachs is more focused on institutions and would work exclusively 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 details on the three tokenization projects expected to launch this year, but said one focuses on the fund complex in the U.S. and the other on debt issuance in Europe.
With the U.S. presidential election just months away and a potential shift in the government’s regulatory approach to cryptocurrencies, McDermott said the bank’s opportunities in this space could expand, including the ability to hold crypto assets in cash. “There could be other things that we as a company would naturally be interested in doing, subject to approval, like execution and perhaps sub-custody,” he told Fortune.