Goldman Sachs to Spin Out Cryptocurrency Platform, Create Industry-Owned Blockchain Venture

Global investment bank Goldman Sachs is making a significant move into the cryptocurrency and blockchain space. The bank is preparing to spin out its digital assets platform into a new independent company, according to a Bloomberg report on Nov. 18. The initiative aims to enhance the development and trading of financial instruments on blockchain networks and could mark a major milestone in institutional blockchain adoption.

Partnering for Expansion

The new entity, spearheaded by Goldman’s global head of digital assets, Mathew McDermott, will partner with industry players to bolster its capabilities and introduce innovative offerings. One confirmed strategic partner is Tradeweb Markets, an electronic trading platform.

“It’s in the best interest of the market to have something that is industry-owned,” McDermott told Bloomberg, highlighting the bank’s intention to create an inclusive and widely accepted blockchain platform.

Timeline and Focus Areas

The spinout process is expected to take 12 to 18 months, subject to regulatory approvals. While still in its early stages, the project reflects Goldman Sachs’ growing commitment to blockchain technology.

McDermott revealed that the new company would cater exclusively to financial institutions, avoiding retail markets. The firm will rely on permissioned blockchains, emphasizing privacy, security, and compliance while targeting marketplaces for tokenized real-world assets (RWAs).

Expanding Tokenization Offerings

Goldman Sachs has been bullish on tokenization, with plans to launch three new tokenization products in the U.S. and Europe by the end of 2024. McDermott stated that these offerings aim to cater to the “fund complex” in the U.S. and European debt markets.

The bank plans to enable faster execution times and expand the range of assets available as collateral, positioning the new platform as a leader in tokenized RWA trading.

RWAs such as tokenized U.S. Treasury bills and other money market instruments are gaining traction for offering low-risk yield. As of Nov. 14, the total value locked in tokenized U.S. Treasury debt reached $2.4 billion, according to data from RWA.xyz.

Surging Interest in Tokenized Assets

Goldman Sachs attributes the growing momentum in crypto and tokenization to the rapid adoption of exchange-traded funds (ETFs) for digital assets.

Since January, nearly a dozen Bitcoin ETFs have been listed following U.S. regulatory approvals. In July, the first spot Ether ETFs were approved for trading on U.S. exchanges, further boosting institutional interest.

Goldman Sachs has positioned itself as a leader in this space, reportedly becoming one of the largest buyers of Bitcoin ETFs in 2024.

What This Means for Blockchain Adoption

The planned spinout reflects Goldman Sachs’ recognition of blockchain’s potential to transform financial markets. By creating a standalone company with strategic partnerships, the firm aims to lead the charge in institutional blockchain adoption while addressing market demands for tokenized RWAs and other innovative financial instruments.

This move could set a precedent for other traditional financial institutions looking to embrace blockchain technology and underscores the growing convergence between legacy finance and the crypto industry.