Goldman Sachs is reportedly exploring becoming an authorized participant in a spot Bitcoin exchange-traded fund (ETF) proposed by BlackRock and Grayscale. This potential move marks a notable shift for U.S. banks, which have traditionally been cautious about direct involvement in cryptocurrencies.
A January 4 Bloomberg report said the investment giant was in discussions with Grayscale on the matter. Similar previous reports suggest that BlackRock may also strike a deal with Goldman Sachs.
Goldman Sachs Joins Major Players in Spot Bitcoin ETF Arena
Goldman Sachs is preparing a highly anticipated spot Bitcoin ETF, joining the league of financial leaders including JPMorgan Chase, Jane Street, and Cantor Fitzgerald. The participation of giants like Goldman Sachs signals a changing landscape that could potentially redefine cryptocurrency investment and regulatory frameworks.
Last year, BlackRock took a leap forward in its Bitcoin ETF by amending its filing and naming JP Morgan Securities and Jane Street as authorized participants. This strategic maneuver marked a pivotal development in the company’s application process for a spot Bitcoin ETF.
Authorized participants play an important role as intermediaries between fund issuers and investors. BlackRock’s choice to bring on board JP Morgan Securities and Jane Street highlighted this by simplifying the share issuance and redemption process and ensuring investors can enter or exit the fund efficiently.
As the deadline for submitting amendments approached, Valkyrie took action in the ETF space, naming Jane Street and Cantor Fitzgerald as approved participants.
The company emphasized that the current overwhelming presence of Democrats within the SEC leadership has a significant impact on the likelihood of a spot Bitcoin ETF application being rejected. Approval of Spot Bitcoin ETF is of immense significance for the expansion of the cryptocurrency market. Matrixport emphasized that this approval could foster widespread acceptance of cryptocurrencies.
Nonetheless, Gensler’s focus on industry compliance suggests hesitation in endorsing these financial instruments. The resulting political and regulatory implications could hinder the rapid establishment of Bitcoin as a mainstream store of value through spot Bitcoin ETFs.
What Goldman Sachs executives think about Bitcoin ETFs in 2024
Introducing an exchange-traded fund for a spot Bitcoin ETF could significantly increase institutional interest in the cryptocurrency market, according to Mathew McDermott, director of digital assets at Goldman Sachs.
“It expands and strengthens market liquidity. how? By building institutional products that institutions can trade without having to deal directly with the underlying assets,” McDermott explained to Fox Business. “I think this will open up opportunities for pensions, insurance companies, etc.”
However, McDermott does not expect an immediate overhaul following the approval of the spot cryptocurrency ETF. He plans gradual changes to the landscape over the coming years once approvals are granted.
More than a dozen companies, including financial giants such as BlackRock and Fidelity, have filed applications for spot Bitcoin ETFs and are awaiting approval from the U.S. Securities and Exchange Commission. Market sentiment is increasingly optimistic about regulators eventually giving approval to ETFs directly linked to Bitcoin investments.
Essentially, McDermott is predicting growth in the cryptocurrency market next year, driven by the expanding commercial use of blockchain and the increased participation of traditional financial institutions over the past 15 to 18 months.
Earlier this year, Goldman Sachs launched GS DAP, a tokenization platform. The private blockchain facilitated the sale of $102 million in tokenized green bonds in Hong Kong, reducing settlement time from five days to just one day after the transaction. McDermott expressed his vision for broader use of GS DAP alongside other assets, including alternatives, fund units, derivatives and private equity funds.
Goldman’s digital assets team consisted of 70 people last year, a significant increase from the four-person team it had in 2020 when McDermott assumed leadership. With the potential for further expansion, McDermott expressed his intention to hire additional staff “as appropriate.”