Mathew McDermott, head of digital assets at Goldman Sachs, reportedly said the potential approval of spot bitcoin and ether exchange-traded funds would increase institutional interest in crypto.
“One, it broadens and deepens the liquidity in the market. And why does it do that? It does that because you’re actually creating institutional products that can be traded by institutions that don’t need to touch the bare assets,” McDermott told Fox Business. “And I think that, to me, that opens up the universe of the pensions, insurers, etc.”
McDermott, however, doesn’t foresee an immediate transformation with the approval of spot crypto ETFs. He sees a gradual shift in the landscape over the upcoming year if approval is granted.
Over a dozen firms, including traditional financial giants BlackRock and Fidelity, have submitted applications for spot bitcoin ETFs and await the green light from the U.S. Securities and Exchange Commission. There is growing optimism in the market that the regulator will finally approve ETFs that will directly invest in bitcoin.
McDermott on 2024 crypto outlook
Overall, McDermott expects the crypto market to grow next year, driven by increased commercial applications of blockchain and the growing involvement of traditional financial institutions in the space over the last 12 to 18 months.
McDermott particularly highlighted the tokenization use case, stating that there will be a development of those marketplaces next year. “So where we start to see scale adoption, particularly across the buy side in the context of investors,” he said. “And that’s because we’ll start to see the emergence of secondary liquidity on chain, and that’s a key enabler. So, for me, that’s one of the key developments for next year.”
Earlier this year, Goldman Sachs launched its tokenization platform called GS DAP. GS DAP is a private blockchain, and Hong Kong used it to sell $102 million of tokenized green bonds earlier this year, reducing settlement time to one day after the trade from five. At the time, McDermott reportedly said he could see GS DAP being used for other assets, such as alternatives, fund units, derivatives, and private equity.
Goldman’s digital asset team was 70-person strong earlier this year, and McDermott was reportedly open to hiring more people “as appropriate.” The team had only four members in 2020 when McDermott took charge of it.
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