Blockchain technology and its benefits have attracted the attention of companies from all sectors. On Tuesday, in a media interaction, Mathew McDermott, the global head of digital assets at Goldman Sachs revealed the bank’s plan for blockchain technology.
The executive said that the bank is “hugely supportive” of blockchain technology and looks forward to expanding its staff. It is developing GS DAP, a tokenization platform built on a private blockchain.
Hong Kong utilized the GS DAP platform for the sale of $102 million worth of tokenized green bonds. The European Investment Bank also uses GS DAP to reduce the bond issuance settlement from five days to the same day.
As GS DAP is efficient for settlement, equity pricing, and Initial Public Offering (IPO), McDermott believes it can also be used for other assets. The executive sees potential uses for alternatives, fund units, derivatives, and private equity.
McDermott says that blockchain will make the process more efficient and transparent for investors. He said:
The blockchain platform allows investors to see more data, have more transparency, more accurate pricing on an asset, which will then encourage more liquidity and hopefully bring in more investors in the secondary market.
However, the Goldman Sachs executive was skeptical about public blockchains like Bitcoin and Ethereum. He opined that major transactions on public blockchains could be years away due to regulatory concerns.
Notably, the decision of the company to increase staff in the blockchain division comes despite laying off 3,200 employees in December. Not just that, Goldman Sachs also counts their decision to prioritize the headcount increase of the digital assets team “as appropriate.”
McDermott took over as the Global Head of Digital Assets in 2020, handling a team of four. Since then, the team has increased to 70 members in three years.
Goldman Sachs is one of the largest investment banks in the world, handling over $2 trillion in assets under management. The bank is also planning to invest in crypto companies, post the shakeout due to the FTX collapse.
In April last year, McDermott stated that Goldman Sachs was exploring non-fungible tokens (NFTs) while referring to them as financial instruments. Towards the end of last year, Goldman Sachs announced that it will soon make a website that describes and organizes cryptocurrencies available to institutional clients. The program, known as Datonomy, will assist institutional investors unfamiliar with the market; the hundreds of currencies and tokens that currently make up a $1.05 trillion sector.
Several financial institutions have adopted blockchain technology for the multiple benefits it offers. In collaboration with the central bank of Singapore, JPMorgan participated in its first-ever decentralized finance (DeFi) transaction. According to the Monetary Authority of Singapore (MAS), the transaction was one of many to announce the commencement of Project Guardian.
According to MAS, the pilot program’s goal is to identify the potential use cases of DeFi applications in the financial markets. Additionally, it was an asset tokenization and international transfer experiment.