Approval of Spot Crypto ETFs Would Increase Institutional Interest in Crypto, Says Goldman Sachs Exec
Mathew McDermott, head of digital assets at Goldman Sachs, believes that the potential approval of spot bitcoin and ether exchange-traded funds (ETFs) would lead to a surge in institutional interest in cryptocurrencies. McDermott explained that ETF approval would enhance market liquidity and create institutional products that can be traded without directly holding the underlying assets. This development could attract pensions, insurers, and other institutional investors to enter the crypto market.
However, McDermott doesn’t expect an immediate transformation if spot crypto ETFs are approved. He anticipates a gradual shift over the next year. Over a dozen financial firms, including BlackRock and Fidelity, have submitted applications for spot bitcoin ETFs and are awaiting approval from the U.S. Securities and Exchange Commission.
McDermott’s Outlook on Crypto Market in 2024
In addition to discussing spot crypto ETFs, McDermott shared his expectations for the crypto market in 2024. He predicts growth driven by increased commercial applications of blockchain technology and greater involvement of traditional financial institutions in the space. McDermott specifically highlighted the tokenization use case as a significant development next year. He believes there will be an emergence of secondary liquidity on chain, enabling broader adoption across investors.
Goldman Sachs has already launched its tokenization platform called GS DAP, which was used in Hong Kong to sell $102 million of tokenized green bonds. McDermott envisions GS DAP being utilized for other assets such as alternatives, fund units, derivatives, and private equity.
The digital asset team at Goldman Sachs has grown significantly under McDermott’s leadership, with plans to hire more employees as needed.
Hot Take: Goldman Sachs Executive Sees Institutional Interest in Crypto Soaring with Spot Crypto ETF Approval
Mathew McDermott, head of digital assets at Goldman Sachs, believes that the approval of spot bitcoin and ether exchange-traded funds (ETFs) would have a profound impact on institutional interest in cryptocurrencies. Not only would this broaden and deepen market liquidity, but it would also create institutional products that don’t require direct exposure to the underlying assets. McDermott envisions pensions, insurers, and other institutional players entering the crypto market as a result.
While McDermott expects a gradual shift in the landscape if spot crypto ETFs are approved, there is growing optimism that the U.S. Securities and Exchange Commission will greenlight these investment vehicles. In addition to ETFs, McDermott foresees increased commercial applications of blockchain technology and the development of tokenization marketplaces as key drivers for crypto growth in 2024.
Goldman Sachs’ own tokenization platform, GS DAP, has already demonstrated its potential by facilitating the sale of tokenized green bonds. With plans to expand its use to other asset classes, Goldman Sachs is positioning itself at the forefront of the evolving digital asset landscape.
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