Goldman Sachs Executive Foresees Increased Institutional Interest with Approval of Spot Bitcoin ETFs

Goldman Sachs' Head of Digital Assets, Mathew McDermott, anticipates a surge in institutional interest in the crypto market if spot bitcoin and ether exchange-traded funds (ETFs) gain regulatory approval. McDermott emphasizes the potential positive impact on liquidity and expects the gradual adoption by institutional players such as pensions and insurers.

Spot Crypto ETF Approval's Impact 

According to McDermott, the approval of spot crypto ETFs will deepen market liquidity by providing institutional products that allow trading without direct asset involvement. He envisions a broadening of market participation by traditional financial institutions, leading to increased interest from sectors like pensions and insurers.

Timeline and Optimism 

McDermott doesn't anticipate an immediate transformation but foresees a gradual shift in the crypto landscape over the next year if spot crypto ETFs receive regulatory approval. Over a dozen firms, including industry giants BlackRock and Fidelity, have submitted applications for such ETFs, generating optimism for potential approval from the U.S. Securities and Exchange Commission.

2024 Crypto Outlook: 

Expecting overall growth in the crypto market next year, McDermott attributes it to the expanded commercial applications of blockchain and increased involvement of traditional financial institutions over the past 12 to 18 months. He particularly highlights the growth of tokenization marketplaces in 2024, anticipating scale adoption and the emergence of secondary liquidity on the blockchain.

Goldman Sachs' Tokenization Platform: 

Earlier this year, Goldman Sachs launched its tokenization platform, GS DAP, which operates on a private blockchain. McDermott envisions the platform being used for various assets, including alternatives, fund units, derivatives, and private equity. The digital asset team at Goldman Sachs has seen significant growth, expanding from four members in 2020 to a 70-person team, with potential further expansions.

Conclusion: 

Mathew McDermott's insights point toward a potential transformative impact on the crypto market with the approval of spot crypto ETFs, opening doors for institutional participation and further developments in the tokenization space.