Goldman Sachs Aboard the Crypto Train

Share this story:
Edward Valencia
Aug 7 . 3 min read

Goldman Sachs has gone back on claiming that crypto is not an ‘asset’ to naming it just that. Mathew McDermott of Goldman has been named global head of digital assets last month. He is now the new face of blockchain and cryptocurrency on Wall Street. A veteran with an old-school approach to investing with a vision of future world markets’ financial assets residing on electronic ledgers.

“In the next five to 10 years, you could see a financial system where all assets and liabilities are native to a blockchain, with all transactions natively happening on chain. So what you’re doing today in the physical world, you just do digitally, creating huge efficiencies. And that can be debt issuances, securitization, loan origination; essentially you’ll have a digital financial markets ecosystem, the options are pretty vast.”

His vision has come sooner than you might think. All this can be found in the decentralized finance (DeFi) ecosystem run on smart contracts. McDermott is doubling his staff and exploring a possible cryptocurrency for the bank. They’re following JP Morgan Chase’s move on working on their very own JPM Coin.

His first initiative is to create an efficient repo market on the blockchain. Banks are dependent on this market for creating short-term loans that are needed overnight. More than $1 trillion flows through this market every day. He explains it in an interview,

“In securities finance and repo, if you look at those markets, they’re ripe for standardization… There’s a lot of legacy processes in the vast movement of collateral that makes them very cost inefficient, so by leveraging distributed ledger technology, you can standardize processes to manage collateral across the system, and you have a much more efficient settlement process given the real time settlement.”

He’s realizing that our current systems are outdated and we need to modernize them to keep up with a fast-growing civilization. One of his long-term goals is to use ledger technology for massive credit and mortgage markets. These types of markets can also be found in DeFi.

Roadblock. The hardest obstacle that McDermott will have to overcome is the consensus among other institutions and governments. He says that the only way forward is massive adoption from investors and regulators. He’s teaming up with other institutions like JP Morgan and Facebook driving the technology forward for centralized organizations.

Pressure From their Investors. McDermott’s other responsibility is to satisfy their clients that are interested in the crypto space. As more institutional investors seek alternative assets, crypto once again is gaining much attention.

“We’ve definitely seen an uptick in interest across some of our institutional clients who are exploring how they can participate in this space… It definitely feels like there is a resurgence of interest in cryptocurrencies.”

We have seen another recent jump in institutional money flowing in Greyscale’s trusts. They now have total assets under management (AUM) of $5.5 billion. With this Greyscale continues to be the largest crypto asset manager in the industry.

Goldman is a good example of institutions that are moving towards disruptive technology, not because they want to but because they have to. If they don’t stay ahead of the curve they can easily fall off like many successful companies that reigned.

Read More

All provided materials and tools are for entertainment purposes only and should never be considered financial advice. Crypto News 19 will not take any responsibility for lost funds based on investments/trades made on information found here or any linking website/affiliate. This includes all social media posts and all other communications occurring under the name Crypto News 19. You should always seek professional advice before making any investment or trade.