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Goldman Sachs Plans Real-World Asset Tokenization

This move comes as part of its strategy to capitalize on the growing interest in the crypto industry

July 11, 2024 05:00 AM

Reading time: 1 minute, 58 seconds

TL;DR Goldman Sachs is preparing to enter the tokenization sector, with three offerings expected later this year. The bank's focus will be on issuing real-world assets on public blockchains like Ethereum or Solana.

Goldman Sachs is set to make a significant leap into the tokenization sector by the end of this year. The banking giant plans to launch three tokenization projects to capitalize on the surging interest in the crypto industry. Mathew McDermott, Global Head of Digital Assets at Goldman Sachs, shared these plans in a recent report by Fortune.

Tokenization Projects

Tokenization involves issuing real-world assets on public blockchains like Ethereum or Solana, such as money market funds and real estate holdings. Goldman Sachs aims to introduce three such projects in partnership with significant clients. One of these projects will be the bank's first venture into the United States.

While other financial institutions like BlackRock have already made headway in this space, McDermott emphasized that success hinges on creating products that meet investor demand. For instance, BlackRock launched its first tokenized fund, BUIDL, on the Ethereum blockchain in March, drawing considerable attention.

Institutional Focus

Goldman Sachs recently hosted a digital asset summit in London, attracting over 500 clients. During the event, McDermott highlighted the transformative potential of tokenization in asset management. "There's no point in doing it just for the sake of it," McDermott stated, stressing the importance of delivering solutions that investors genuinely want.

The internal view on crypto within Goldman Sachs varies. While Sharmin Mossavar-Rahmani, Goldman Sachs's CIO, has expressed skepticism about crypto as an investment asset class, McDermott pointed out the bank's active involvement in institutional crypto activities. This includes trading cash-settled crypto derivatives and participating in recently approved ETF markets.

Regulatory Constraints and Future Plans

Due to regulatory constraints, Goldman Sachs primarily targets institutional clients and plans to work exclusively with private blockchains. Although McDermott refrained from disclosing specific details about the upcoming tokenization projects, he mentioned that one would focus on the US fund complex and another on European debt issuance.

McDermott believes the bank's opportunities in the crypto space could expand further, especially with potential changes in government regulatory stances following the US presidential election. This could include holding spot crypto assets and exploring execution and sub-custody services, subject to approval.

As of this writing, Bitcoin (BTC), the largest cryptocurrency on the market, was trading at $57,580, presenting a slight decrease of 0.5% in the 24-hour time frame, aiming to consolidate above this level.

Goldman Sachs' move into tokenization could fundamentally change asset management strategies, offering new opportunities for institutional investors.

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