Goldman Sachs to spinout digital assets business within 12-18 months: Bloomberg

by Jason Shubnell

Finance firms • November 18, 2024, 11:21AM EST

Published 1 minute earlier on

UPDATED: November 19, 2024, 10:52AM EST

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Quick Take

The new company would allow large financial firms to create, trade and settle financial instruments via blockchain.
Goldman Sachs launched a crypto desk in 2021 and launched its Digital Asset Platform a year later.

Goldman Sachs is speaking with potential partners about spinning out its digital-assets platform into a new company, according to Bloomberg.

"The bank is in talks with a number of market participants on the plans as it continues to build out the platform’s capabilities and develop new commercial use cases." said the report, published Monday. "Plans for the new company are in the early stages, but the long term goal is to execute the spin-out within the next 12 to 18 months, subject to regulatory approvals."

The new company would allow large financial firms to create, trade and settle financial instruments via blockchain. Electronic trading platform Tradeweb Markets will work with Goldman Sachs to bring new commercial use cases to the digital assets platform, according to the report.

“It’s in the best interest of the market to have something that is industry-owned,” Mathew McDermott, Goldman’s global head of Digital Assets, told Bloomberg.

Goldman Sachs plans to facilitate secondary transactions in private digital-asset companies, helping clients like family offices gain liquidity while enabling buyers to benefit from private market discounts. Additionally, the bank aims to resume Bitcoin-backed lending operations, according to McDermott.

“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 the commercial use cases.”

Goldman's history with digital assets

Goldman Sachs launched a crypto desk in 2021 and its Digital Asset Platform in 2022. In March, the bank saw a resurging interest in crypto-related products from its hedge fund clients.

Goldman was one of a few banks that tested the blockchain-based communication system Canton Network over the past two years. The test demonstrates "growing momentum" among traditional financial institutions to use cases for blockchain tech "after a decade" of experimentation, Bloomberg reported in March.

Goldman Sachs reportedly planned to launch three tokenization projects by the end of this year, according to reports in July. One would target the U.S. fund sector while another would focus on European debt markets. McDermott has said the bank is primarily focused on using permissioned networks — as opposed to decentralized blockchains — due to regulatory concerns.

Goldman Sachs CEO David Solomon said this summer that the underlying technology behind crypto is "super interesting," highlighting how progress can be made to remove friction from the financial system as it becomes increasingly digitized.

In a July CNBC interview, Solomon described Bitcoin as a "speculative investment" with no clear use case but acknowledged its potential as a store of value, akin to a gold reserve.

According to its quarterly 13F filing with the U.S. Securities and Exchange Commission, Goldman Sachs held spot bitcoin ETFs worth around $418.65 million as of June 30. The bank’s largest holdings were 6.9 million shares of BlackRock’s IBIT, worth $238.6 million at the time.

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About Author

Jason is a U.S. news editor at The Block. He previously worked as a staff writer and later served as managing editor at Benzinga, a financial news and data company. He led Benzinga's daily markets coverage as well as the expansion of the outlet's cannabis, cryptocurrency and sports betting verticals. He earned a bachelor's degree in journalism from Central Michigan University and resides in the suburbs of Detroit, Michigan. Follow him on X @JasonShubnell.