- Goldman Sachs expects significant growth in blockchain asset trading volumes in coming years due to rising institutional interest. The bank sees growing client demand for crypto derivatives amid bitcoin’s recent price surge.
- Goldman aims to tokenize traditional assets like bonds on blockchain, citing potential benefits like faster settlement. But replacing most markets with blockchain remains far off due to current limitations.
- While an ETF approval may not immediately affect liquidity, it could draw more asset managers to crypto trading. Goldman remains focused on both tokenizing assets and meeting institutional demand for crypto derivatives.
Goldman Sachs expects a significant increase in blockchain asset trading volumes in the next few years due to rising institutional interest, according to the bank’s digital assets chief. The prediction comes as the market awaits regulatory approval for a spot bitcoin exchange-traded fund (ETF).
Goldman Sachs’ Growing Involvement in Digital Assets
The Wall Street investment bank has seen growing client demand for cryptocurrency derivatives amid bitcoin’s 50% price surge this quarter. But Goldman remains focused on developing blockchain tokens beyond just cryptocurrencies, said global digital assets head Mathew McDermott. He cited a “huge appetite” for digital assets that has expanded over the last year.
Potential Benefits of Asset Tokenization
Banks have long aimed to use blockchain technology to trade traditional assets like bonds at scale. McDermott said blockchain could enable faster, more efficient operations and settlement. Tokenized securities could also allow collateral and liquidity transfer between parties quickly and accurately.
Challenges to Widespread Adoption
However, replacing most financial markets with blockchain remains far off. Australia’s stock exchange paused its blockchain upgrade last year due to technology limitations. And there’s no routine issuance or trading of tokenized bonds and other assets yet. But McDermott expects a significant increase in blockchain trading volumes in the next couple years.
Growing Interest in Crypto Trading
As part of its FX desk, Goldman also runs a team trading cryptocurrency derivatives for institutional clients. Interest has risen recently around a potential bitcoin ETF approval. While that wouldn’t immediately spike liquidity, it could attract more asset managers to crypto.
Conclusion
Goldman Sachs’ digital assets chief sees surging interest in blockchain-based trading from institutions like hedge funds. But adoption at scale is still years away. The bank remains focused on tokenizing traditional assets while also meeting client demand for crypto derivatives.
