Goldman Sachs Reports Growing Institutional Interest in Cryptocurrency

Goldman Sachs has reportedly been making significant strides in the cryptocurrency industry.

A recent surge in cryptocurrency prices, with bitcoin hitting an all-time high of $73,794 last week, has been primarily driven by retail investors, but institutional interest is growing, Mathew McDermott, the global investment bank’s head of digital assets, said Tuesday (March 19) at a conference in London, Bloomberg reported.

McDermott said that Goldman Sachs, which launched its crypto trading desk in 2021, has seen a significant transformation in client types and volumes, according to the report.

Analysts attribute the recent gains in bitcoin to the launch of U.S. spot bitcoin exchange-traded funds (ETFs), which McDermott noted has caused a “psychological shift” in the market, the report said. However, he also acknowledged that the cryptocurrency market is not without its risks, with regulators consistently warning about the high risks associated with digital assets.

Despite the potential for significant gains, McDermott pointed out that cryptocurrencies have limited real-world use, per the report. However, he believes that the underlying technology, blockchain, holds promise. Over time, more asset classes will be tokenized and traded using blockchain technology, McDermott predicted, although he expects this development to take one or two years to materialize.

In another recent development in this space, it was reported March 12 that Goldman Sachs was one of several firms that took part in a series of tests on a blockchain network connecting various financial institutions.

In one of the largest such pilots in capital markets, the participants made more than 350 simulated transactions on blockchain for tokenized assets, fund registry, digital cash, repo, securities lending and margin management.

On March 13, Travis Hill, vice chairman of the Federal Deposit Insurance Corp. (FDIC), said in a speech that blockchain is full of promise, cryptocurrency perhaps less so, and tokenization is already shifting what it means to “own” an asset.

Hill called for regulatory “clarity” on technology, its uses, and especially “what we consider safe and sound.”

He added that through the use of blockchain, commercial bank deposits, government and corporate bonds, money market fund shares, gold and other commodities can “improve the way we transfer value.”