SUMMARY Goldman Sachs’ Head of Digital Assets, Mathew McDermott, anticipates that the approval of spot bitcoin and ether exchange-traded funds (ETFs) will stimulate increased institutional interest in the cryptocurrency market. According to McDermott, this approval would enhance market liquidity by introducing institutional products that don’t require direct handling of the underlying assets. He envisions a gradual transformation in the landscape over the next year if regulatory approval is granted.
Over a dozen firms, including industry giants BlackRock and Fidelity, have applied for spot bitcoin ETFs, awaiting approval from the U.S. Securities and Exchange Commission. There is growing optimism that these ETFs, directly investing in bitcoin, will be greenlit.
McDermott foresees overall growth in the crypto market next year, attributing it to the expanding commercial applications of blockchain and increased participation of traditional financial institutions over the past 12 to 18 months.
A key highlight for McDermott is the development of tokenization marketplaces in the coming year, particularly in terms of scale adoption by investors on the buy side. He emphasizes the emergence of secondary liquidity on chain as a pivotal factor enabling this development.
Earlier this year, Goldman Sachs launched its tokenization platform, GS DAP, which operates on a private blockchain. Notably, Hong Kong utilized GS DAP to sell $102 million of tokenized green bonds, reducing settlement time to one day. McDermott envisions broader applications of GS DAP for assets like alternatives, fund units, derivatives, and private equity.
Goldman’s digital asset team, which was initially a team of four in 2020, grew to 70 members earlier this year. McDermott expresses openness to further expansion based on the team’s needs.