• Thu. Jul 25th, 2024

Goldman Sachs Explores Several Bitcoin ETF Partnerships

Walter Swift

ByWalter Swift

Jan 5, 2024

Goldman Sachs is reportedly exploring becoming an authorized participant for BlackRock and Grayscale’s proposed spot Bitcoin exchange-traded funds (ETFs). This potential move signifies a notable shift for the U.S. banks that are traditionally cautious about direct involvement in cryptocurrencies. A January 4 Bloomberg report indicates that the investment behemoth is in talks with Grayscale about the issue. A similar earlier report shows that BlackRock may also engage Goldman Sachs.

Goldman Sachs Joins Major Players in the Spot Bitcoin ETF Arena

Goldman Sachs joins the league of financial titans—JPMorgan Chase, Jane Street, and Cantor Fitzgerald—in gearing up for the highly anticipated spot Bitcoin ETFs. The involvement of heavyweights such as Goldman Sachs signals a shifting landscape that could potentially redefine cryptocurrency investments and regulatory frameworks.

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In the past year, BlackRock leaped forward in its spot in Bitcoin ETF by revising its filing and appointing J.P. Morgan Securities and Jane Street as authorized participants. This strategic maneuver marked a pivotal advancement in the firm’s application process for the spot Bitcoin ETF.

Authorized participants play a crucial role as intermediaries between fund issuers and investors. BlackRock’s choice to engage J.P. Morgan Securities and Jane Street highlighted this by simplifying share creation and redemption processes, ensuring investors can efficiently enter or exit the fund.

As the deadline for filing amendments approached, Valkyrie took action in the ETF sphere, nominating Jane Street and Cantor Fitzgerald as authorized participants.

The firm highlighted that the predominant presence of Democrats within the current SEC leadership significantly influences the potential refusal of spot Bitcoin ETF applications. Spot Bitcoin ETF approvals hold immense importance for the crypto market’s expansion. Matrixport emphasized that such authorization could spur the widespread acceptance of cryptocurrencies.

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Nonetheless, Gensler’s strong focus on industry compliance suggests hesitance in endorsing these financial tools. The resulting political and regulatory impacts might hinder the swift establishment of Bitcoin as a mainstream store of value through a spot Bitcoin ETF.

A Goldman Sachs Executive’s Thoughts On Bitcoin ETF in 2024

According to Mathew McDermott, Director of Digital Assets at Goldman Sachs, introducing exchange-traded funds for spot bitcoin ETF could significantly increase institutional interest in the cryptocurrency market.

“It expands and strengthens market liquidity. How? By establishing institutional products that allow institutions to trade without directly handling the underlying assets,” explained McDermott to Fox Business. “This, in my opinion, opens up opportunities for pensions, insurers, and more.”

However, McDermott doesn’t anticipate an immediate overhaul following the approval of spot crypto ETFs. He envisions a gradual transformation in the landscape over the upcoming year, should approval be granted.

More than a dozen firms, including established financial giants like BlackRock and Fidelity, have filed applications for spot bitcoin ETFs and await approval from the U.S. Securities and Exchange Commission. Market sentiment is increasingly optimistic about the regulator eventually giving the green light to ETFs directly linked to Bitcoin investments.

In essence, McDermott foresees growth in the crypto market in the coming year, propelled by the expanding commercial use of blockchain and the increased engagement of traditional financial institutions over the last 15 to 18 months.

Earlier in the year, Goldman Sachs introduced its tokenization platform, GS DAP. This private blockchain facilitated Hong Kong’s sale of $102 million in tokenized green bonds, reducing settlement time from five days to just one after the trade. McDermott expressed a vision for GS DAP’s broader use with other assets like alternatives, fund units, derivatives, and private equity.

The digital asset team at Goldman numbered 70 members last year, a significant increase from its four-person team in 2020 when McDermott assumed leadership. Reportedly open to expanding further, McDermott expressed a willingness to hire additional personnel “as appropriate.”

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Walter Swift

Walter Swift

Walter Swift is an adept crypto writer, known for his deep insights into the decentralized world. His pieces artfully break down complex blockchain topics, making them accessible to a broad audience. With a passion for emerging technologies, Walter's articles are a beacon for crypto enthusiasts and novices alike.

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