Mathew McDermott, head of digital assets at Goldman Sachs, reportedly said that the possible approval of bitcoin and ether exchange-traded funds would increase institutional interest in cryptocurrencies.
"First, it broadens and deepens liquidity in the market. And why does it do that? It does that because you're actually creating institutional products that can be traded by institutions that don't need to touch the core assets," McDermott said Fox Business. "And I think that, for me, that opens up the universe of pensions, insurance companies, etc."
McDermott, However, it does not foresee an immediate transformation with the approval of Spot Crypto ETFs. He sees a gradual change in the outlook over the next year if approval is granted.
More than a dozen companies, including traditional financial giants BlackRock and Fidelity, have filed applications for spot bitcoin ETFs and are awaiting the green light from the U.S. Securities and Exchange Commission. There is growing optimism in the market that the regulator will finally approve ETFs that will invest directly in bitcoin.
McDermott on crypto outlook for 2024
Overall, McDermott expects the cryptocurrency market to grow next year, driven by the rise of commercial blockchain applications and the growing participation of traditional financial institutions in the space over the past 12 to 18 months.
McDermott particularly highlighted the tokenization use case and stated that those markets will develop next year. โSo we started to see large-scale adoption, particularly on the buy side in the investor context,โ he said. "And that's because we'll start to see the emergence of secondary liquidity on-chain, and that's a key enabler. So, to me, that's one of the key developments for next year."
Earlier this year, Goldman Sachs launched its tokenization platform called GS DAP. GS DAP is a private blockchain, and Hong Kong used it to sell $102 million in tokenized green bonds earlier this year, reducing settlement time from five to one day after the transaction. At that time, McDermott allegedly saying I could imagine GS DAP being used for other assets such as alternatives, fund holdings, derivatives and private equity.
Goldman's digital assets team was 70 strong as of earlier this year, and McDermott was reportedly open to hiring more people "as appropriate." The team had only four members in 2020 when McDermott took over.
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