Mathew McDermott, head of Digital Assets at Goldman Sachs, told Fortune that the bank is planning three tokenization projects this year. While he didn’t reveal details, it will include its first U.S. tokenization involving funds and a debt issuance in Europe.
Targeting funds stateside is no big surprise given that’s the only space where incumbents have really embraced tokenization, because of regulatory headwinds. The inability of banks to provide custody for tokenized assets has been a significant factor. It appears that’s about to be resolved according to Representative Maxine Waters. She said the SEC is working on amendments to the SAB 121 accounting rule that’s blocked bank digital asset custody to date.
So far asset managers in the tokenization space have primarily targeted retail clients (Franklin Templeton, Hamilton Lane) or crypto institutions (BlackRock). Goldman Sachs’ focus is more institutional. The tokenization of money market funds has proven popular across the board. For example, London-based Fidelity International recently tokenized a money market fund for use as collateral on JP Morgan’s Tokenized Collateral Network.
When talking to Fortune, McDermott mentioned Goldman’s interest in creating marketplaces for tokenized assets as well as collateral.
Regarding a debt issuance in Europe, that’s where Goldman’s first tokenization issuance came. The bank provided the permissioned blockchain for the European Investment Bank’s second digital bond issuance. That saw the launch of its Goldman Sachs Digital Assets Platform (GS DAP). Subsequently, it used the platform for Hong Kong’s first tokenized green bond. In that case, it wasn’t a natively digital bond, but tokenized from a conventional issuance.
Goldman is also using its GS DAP in the European Central Bank’s wholesale DLT settlement trials using central bank money.
On the crypto front, the bank trades cash settled derivatives on behalf of clients. It also has a role in the redemption and creation of some of the spot Bitcoin ETFs. McDermott expressed an interest in being able to hold spot crypto, offer sub custody and potentially provide execution.
