Goldman Sachs Group is speaking with potential partners as it plans to spin off its digital-assets platform into a new company for large financial firms to create, trade and settle financial instruments via blockchain technology.
The bank is in talks with a number of market participants on the plans as it continues to build out the platform's capabilities and develop new commercial use cases, Mathew McDermott, Goldman's global head of Digital Assets, said in an interview. Plans for the new company are in the early stages, but the long-term goal is to execute the spinoff within the next 12 to 18 months, subject to regulatory approvals, McDermott said.
"It's in the best interest of the market to have something that is industry-owned," he said.
Electronic trading platform Tradeweb Markets said in a statement that it would work with Goldman to bring new commercial use cases to the digital-assets platform, becoming its first strategic partner.
Goldman's plans come as large financial institutions and governments try to use the technology underpinning cryptocurrencies to issue, trade and settle traditional assets such as cash or bonds faster and more efficiently. Crypto has been on a tear since Donald Trump won the U.S. presidential election this month as investors bet his stance on digital assets will add new impetus to the industry.
Separately, Goldman is looking to facilitate secondaries transactions in private digital-asset companies for its clients, McDermott said. That could make it easier for family offices and other clients who are looking for liquidity, while allowing buyers to take advantage of private market discounts, he said. The bank is also seeking to resume its Bitcoin-backed lending activities, he said.
Goldman launched its digital-asset platform in 2022 as a way to issue traditional assets using blockchain technology, and it has since been used in transactions including the issuance of bonds for the European Investment Bank. While the goal is for the technology platform to be owned by a new entity, Goldman will retain its digital-assets team and continue to expand its broader activities in the space, McDermott said.
Goldman has a history of spinning off software platforms built in-house. In 2013, it broke out electronic trading software group REDI Technologies, while a few years later it spun out Simon, a structured investments marketplace that was part of the bank's Marquee platform.
Wall Street's blockchain efforts have been ongoing for around a decade, and while some applications are now live, few have reached significant scale. In part that's because companies are reluctant to get involved in systems created by their competitors. JPMorgan Chase & Co. began a similar effort similar to Goldman's in 2022 called Onyx. It recently renamed the platform as Kinexys, saying it's "poised to accelerate the adoption of blockchain technology and tokenization into mainstream financial services."
According to McDermott, Goldman's ambition is that an industry-owned digital-asset platform will expand its use, for example in areas such as the tokenization of funds for use as collateral via blockchain.
"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 the commercial use cases."
