Bitcoin ETFs Spark Institutional Crypto Rush, Goldman Sachs Says

Key Takeaways

• Goldman Sachs exec reveals surge in institutional crypto interest, marking a shift from retail-dominated markets.
• The company explores blockchain’s potential for issuing digital bonds and other traditional assets.
• Among others, Goldman Sachs participated in successful Canton Network trial for streamlined cross-blockchain transactions.

The head of digital assets at Goldman Sachs has disclosed  a significant rise in institutional engagement in the cryptocurrency space, marking a departure from a market traditionally dominated by retail investors.

Highlighting this shift, he emphasized  that institutional investors were now entering the fray, showcasing a “transformed” appetite for digital currencies.

Institutional Interest Surge in Crypto Despite Bitcoin Dip

At the Digital Asset Summit (DAS) conference in London, Mathew McDermott , who leads Goldman Sachs’ digital assets division, discussed cryptocurrencies. Since launching a crypto trading desk in 2021, the investment bank has been further developing this venture.

Bitcoin reached an all-time high last week, but it has recently experienced a downturn, falling below $63,000 on Tuesday.

McDermott said :

“The price action … has still been driven by retails primarily, but it’s the institutions that we’ve started to see come in. You really see now the appetite has transformed.”

Goldman Sachs Boss: Crypto Here to Stay Thanks to ETFs

Last year was challenging but, as we moved into this year, there has been a significant shift not only in the variety of clients but also in the volume of transactions, according to McDermott.

The Goldman Sachs chief also mentioned  that the introduction of spot Bitcoin exchange-traded funds (ETFs) led to a psychological change.

Major banks are exploring the possibilities of blockchain technology beyond the realm of cryptocurrencies. They believe it could transform asset trading by allowing the digital issuance of traditional assets, such as bonds.

Although pilot projects have demonstrated potential, the regular issuance and the development of a thriving secondary market for these digital assets have not yet come to fruition.

McDermott commented :

“I do think over time we’ll start to see more asset classes get tokenised and actually get some scale – but maybe that’s one or two years down the line.”

Wall Street Tests Blockchain Interoperability With Canton Network

Recently, Goldman Sachs, CBOE, Standard Chartered, and several other financial entities took part in a trial run of the Canton Network , a protocol designed to enable interoperability among applications utilizing resources across different blockchains.

In the pilot, 45 institutions executed 350 simulated transactions through decentralized applications (dapps) offering various services, including fund registry, cash registry, bond registry, trading, margin, and financing.

Digital Asset stated  that the pilot demonstrated the protocol’s ability to lower costs, risks, and inefficiencies. It aims to comply with regulatory standards for the issuance, transfer, and settlement of tokenized traditional assets.

About the Author

Teuta Franjkovic

Teuta is a seasoned writer and editor with more than 15 years of experience. She has expertise in covering macroeconomics and technology as well as the cryptocurrency and blockchain industries. She has worked for several publications as a journalist and editor, including Forbes, Bloomberg, CoinTelegraph, Coin Rivet, CoinSpeaker, VRWorld and Arcane Bear. Teuta began her professional career in 2005, working as a lifestyle writer at Cosmopolitan in Croatia. From there, she branched out to several other publications, covering mainly business and the economy. She then turned her attention to the world of cryptocurrency and blockchain, believing that crypto is among the most important inventions in the history of humanity. Her involvement in fintech began in 2014 and she has since lent her expertise in writing, editing and gathering information about the world of crypto, blockchain, NFTs and Web3. An all-round news hound, mentor, editor, and writer, Teuta enjoys teamwork and good communication. She holds a WSET2 diploma and has a thing for chablis, punkrock music and shoes. She also holds a double MA in Political science and Entrepreneurship.

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