Mathew McDermott, head of digital assets at Goldman Sachs, said the potential approval of spot Bitcoin and Ethereum exchange-traded funds would increase institutional interest in cryptocurrencies.
“First, it broadens and deepens the liquidity of the market. And why does it do that? It does so because it’s creating an institutional product that can be traded by institutions that don’t have to actually touch the assets,” McDermott said. he told Fox Business. “And I think this opens up the world of pensions, insurance companies, etc.”
However, McDermott does not expect any immediate changes with the approval of the spot crypto ETF. He believes things will change gradually over the coming years once approvals are granted.
More than a dozen companies, including traditional financial giants BlackRock and Fidelity, have filed applications for spot Bitcoin ETFs and are awaiting approval from the U.S. Securities and Exchange Commission. There is growing optimism in the market that regulators will finally approve an ETF that invests directly in Bitcoin.
McDermott’s Cryptocurrency Forecast for 2024
Overall, McDermott expects the cryptocurrency market to grow in the coming year, driven by increased commercial adoption of blockchain over the past 12 to 18 months and increased participation by traditional financial institutions in the space.
McDermott said these marketplaces will evolve over the next year, with particular emphasis on tokenization use cases. “So we’re starting to see mass adoption on the buying side, especially in the investor context,” he said. “And that’s because we’re going to start to see the emergence of secondary liquidity on the chain, and that’s a key driver. So for me, that’s one of the key developments for the next year.”
Earlier this year, Goldman Sachs launched a tokenization platform called GS DAP. GS DAP is a private blockchain, and Hong Kong used it to sell $102 million worth of tokenized green bonds earlier this year, reducing settlement time from five days to one day after the transaction. At the time, McDermott reportedly said that GS DAP could also be used for other assets, including alternatives, fund units, derivatives, and private equity funds.
Goldman’s digital assets team consisted of 70 people earlier this year, and McDermott is said to be willing to hire more people “as appropriate.” In 2020, when McDermott was in charge, the team had just four members.
Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.
© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.