Goldman Sachs expects “significant uptick” in blockchain-based asset trading volumes

Goldman Sachs Predicts Surge in Trading Volumes of Blockchain-Based Assets

In a recent interview with Reuters, Goldman Sachs’ global head of digital assets, Mathew McDermott, shared his expectations for a “significant uptick” in trading volumes of blockchain-based assets within the next one to two years. The Wall Street giant has been witnessing increasing client interest in crypto derivatives trading, particularly as the U.S. securities regulator is anticipated to approve an application for a spot bitcoin ETF.

Bitcoin has experienced a remarkable 50% surge this quarter, attracting institutional clients such as hedge funds and asset managers who are exploring the opportunities in the market. McDermott emphasized the bank’s focus on developing digital assets beyond cryptocurrency, including issuing blockchain-based tokens representing traditional assets like bonds. He noted a “huge appetite” for digital assets, which has seen substantial growth over the past year.

While banks have shown interest in utilizing blockchain technology for trading assets beyond cryptocurrencies, implementing this on a large scale would require a significant overhaul of the financial market’s technology infrastructure. McDermott highlighted the potential operational and settlement efficiencies that blockchain could bring, along with the “de-risking” of financial markets.

Despite the challenges, McDermott remains optimistic about the future of blockchain-based trading. He suggested that within the next one to two years, there could be a notable increase in on-chain trading volume, with marketplaces reaching scale within three to five years. However, he believes that replicating the majority of financial markets exclusively on blockchain is still a long way off.

A recent survey of Goldman Sachs’ clients revealed that 16% of respondents expect more than 10% of the financial market to be “tokenized” in the next three to five years. As part of its FX desk, Goldman operates a team trading cryptocurrency derivatives for institutional clients, with McDermott noting a growing interest in the potential of a bitcoin ETF.

While McDermott does not anticipate an immediate spike in liquidity and price following the approval of the ETF, he believes it could attract new institutional investors to the asset class. Overall, he sees the approval of a bitcoin ETF as a positive development that could provide scale and familiarity to the market.

As the digital asset landscape continues to evolve, Goldman Sachs remains at the forefront of exploring the potential of blockchain technology in financial markets.