Goldman Sachs to set up new blockchain venture, targeting faster trading and settlements

Key Takeaways

Goldman Sachs plans to create a new blockchain venture from its digital-assets platform.
Tradeweb Markets will partner with the bank to develop new commercial use cases for the platform.

Goldman Sachs is in the process of putting its existing digital-assets platform into a new entity aimed at large financial firms, allowing them to create, trade, and settle financial instruments using blockchain technology, Bloomberg reported Monday.

The spin-out is in its early stages, with a target completion within 12 to 18 months, contingent upon obtaining the necessary regulatory approvals.

Goldman Sachs wants to address the challenges of blockchain adoption, particularly the reluctance among firms to adopt systems developed by competitors. This hesitation has hindered the scaling of blockchain applications, despite a decade of exploration within Wall Street.

The bank targets building an industry-owned digital asset platform, which would facilitate broader use cases, such as the tokenization of funds for collateral purposes.

“It’s in the best interest of the market to have something that is industry-owned,” said Goldman Sachs’ global head of digital assets Mathew McDermott.

The new venture, focusing on digital assets, will be separate from its existing operations. Despite the spin-out, Goldman Sachs will retain its digital assets team and continue to expand its overall activities in the digital asset space.

The bank, managing over $3 trillion in assets, is engaging partners to initiate the plan. As reported, Tradeweb Markets has agreed to become the platform’s first strategic partner, working with Goldman to develop new commercial use cases for the digital assets platform.

“If you are trying to build out a scalable marketplace, you want to have the right strategic participants embracing this technology,” McDermott said. “You want a number that is nimble enough to operate, driven by commercial use cases.”

Apart from the new blockchain venture, the bank is also planning to facilitate secondary transactions in private digital asset companies for its clients and reactivate its Bitcoin-backed lending activities.

The latest move comes after Goldman Sachs said in July it planned to roll out three major tokenization projects by year-end, targeting institutional clients and emphasizing enhanced transaction speeds. Unlike BlackRock and Franklin Templeton, which target retail customers and focus on public blockchains, Goldman Sachs focuses on private blockchains.

There has been a resurgence in interest among institutional investors in digital assets, spurred on by the launch of spot Bitcoin and Ethereum ETFs in the US.

Goldman Sachs is among the largest holders of BlackRock’s iShares Bitcoin Trust (IBIT). As per a recent filing with the SEC, the bank has increased its stake in IBIT by 83% to 12.7 million shares worth $461 million.