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Bitcoin ETFs Spark Institutional Crypto Rush, Goldman Sachs Says

Last Updated March 20, 2024 12:58 PM
Teuta Franjkovic
Last Updated March 20, 2024 12:58 PM
By Teuta Franjkovic
Verified by Peter Henn

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.

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