Goldman Sachs Plans to Spin Out Digital Assets Platform Aimed at Large Financial Firms

The spin-out is in its early stages, with a target completion within 12 to 18 months, contingent upon obtaining the necessary regulatory approvals.

Goldman Sachs is reportedly planning to spin out its existing digital-assets platform into a new entity that will cater to large financial firms. The platform will enable these firms to create, trade and settle financial instruments using blockchain technology.

The spin-out is said to be in its early stages, with a target completion within 12 to 18 months, subject to obtaining the necessary regulatory approvals.

Goldman Sachs is aiming to address the challenges of blockchain adoption, particularly the reluctance among firms to adopt systems developed by competitors. This hesitation has hindered the scaling of blockchain applications, despite a decade of exploration within Wall Street.

The bank is targeting an industry-owned digital asset platform that will facilitate broader use cases, such as the tokenization of funds for collateral purposes.

"It’s in the best interest of the market to have something that is industry-owned,” said Goldman Sachs’ global head of digital assets Mathew McDermott.

The new venture will be separate from Goldman Sachs' existing operations, focusing on digital assets. However, the bank will retain its digital assets team and continue to expand its overall activities in the digital asset space.

The bank, which manages over $3 trillion in assets, is engaging partners to carry out this plan. Notably, Tradeweb Markets has agreed to become the platform’s first strategic partner, working with Goldman to develop new commercial use cases for the digital assets platform.

“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 commercial use cases.”

Apart from this new blockchain venture, the bank is also planning to facilitate secondary transactions in private digital asset companies for its clients and reactivate its Bitcoin-backed lending activities.