Goldman Sachs Group Inc.’s digital-asset team signaled it’s open to bolstering staff strength and flagged the potential for blockchain technology to improve the functioning of markets such as private equity.
In an interview, the team’s global head Mathew McDermott said the bank remains “hugely supportive” of exploring blockchain applications and that the digital-asset division will hire “as appropriate” this year.
McDermott was speaking last week in Hong Kong after the city utilized Goldman’s tokenization platform, GS DAP, to sell inaugural digital green bonds. His team is now some 70-strong compared with four members in 2020 when he took charge of it.
Goldman as a whole embarked on one of its biggest rounds of job reductions ever last month, cutting about 3,200 positions. The crypto sector is also reeling from thousands of layoffs after a $1.5 trillion market crash in 2022 and the implosion of the FTX exchange. While token prices have steadied recently, crypto hiring remains the exception rather than the rule.
GS DAP is a private blockchain rather than a public one like Ethereum. Hong Kong used it in the sale of HK$800 million ($102 million) of tokenized green bonds, cutting settlement to one day after the trade from five.
McDermott said he could see GS DAP being used for other assets, such as alternatives, fund units, derivatives and private equity. Settlement and pricing in equities and initial public offerings are already efficient enough, he added.
“The blockchain platform allows investors to see more data, have more transparency, more accurate pricing on an asset, which will then encourage more liquidity and hopefully bring in more investors in the secondary market,” McDermott said.
Tokenization has long been touted as a potentially key use of digital ledgers. Proponents argue it can make illiquid assets like private equity easier to buy and sell and that investments such as bonds would get faster settlement.
But progress has been comparatively slow and distrust of crypto generally is elevated following FTX’s wipeout and a spate of other blowups.
Porting major financial transactions to public blockchains may be years away because of regulatory doubts about the safety and soundness of such networks, McDermott said.