Goldman Sachs 2024 Vision: 3 Tokenization Projects

Goldman Sachs plans to launch three tokenization projects before the end of the year. This move will allow the American multinational investment bank to effectively differentiate its offerings from market rivals.

Traditional finance (TradFi) players are steadily entering the blockchain space as clients demonstrate growing interest in digital assets.

Goldman Sachs Targets Institutional Clients With a Tokenization Approach

The report, citing Goldman Sachs’ global head of digital assets, Mathew McDermott, indicated plans to address the growing interest among institutional clients.

It draws inspiration from the growing interest in asset tokenization. This is as Real World Assets (RWA) presents among the most bullish narratives this year. According to McDermott, tokenization and converting RWAs into digital tokens is an opportunity zone for Goldman Sachs to:

Create marketplaces for tokenized assets
Enhance transaction speeds and
Diversify the types of assets available for collateral

Read more: What Are Tokenized Real-World Assets (RWA)?

With these three tokenization projects lined up, McDermott revealed that initial plans will focus on the US market. The US fund complex and European debt issuance, in particular, will be primary focuses, leveraging private blockchains for regulatory compliance.

With this move, the multination bank follows other TradFi players like BlackRock, Franklin Templeton, and Fidelity, among others, who forayed into the crypto space. Their spot ETFs (exchange-traded funds), among others, delivered Bitcoin (BTC) to Wall Street, granting institutional players exposure. Unlike them, however, Goldman Sachs will target its own niche, comprising retail customers, by focusing on public blockchains.

“It is possible Goldman will actually use a permissioned blockchain, rather than a private one. Difference being that once regulation allows it, they will have the option to open the funds up to the wider public liquidity. Secondly, and perhaps more obviously, Goldman deploying these tokenized funds will add significant liquidity to the space. Institutions entering what has so far been a largely retail driven sector is massive in terms of adoption. The large, established, institutional players will have the depth of book to be able to really participate,” Colin Butler, Global Head of Institutional Capital at Polygon, told BeInCrypto.

Bitcoin ETFs Made Asset Tokenization an Opportunity for Institutions

Besides Goldman Sachs, other major financial institutions that are actively exploring and investing in tokenization technologies include JPMorgan and Citi. According to McDermott, the advent of Bitcoin and Ethereum (ETH) ETFs in the US market promises enhanced liquidity. 

With more liquidity coming to the space, Goldman Sachs foresees more pension funds, insurance firms, and other institutional investors coming. Consulting firms such as McKinsey and Boston Consulting Group share optimism, forecasting the RWA market to boom into a multi-trillion dollar by 2030.

This development follows the landmark approval of spot BTC ETFs in January, making RWA tokenization one of the most bullish narratives in 2024. Its potential impact to transform innovation and reshape the landscape of capital markets in the long term attracts industry behemoths.

“RWA is the hottest vertical in crypto. Decentralized ETF (DETF) and many other crypto native projects have been working on tokenization and RWA development for several years,” DETF wrote.

Read more: How To Invest in Real-World Crypto Assets (RWA)?

RWA tokenization involves converting tangible assets like bonds, real estate, and debt into digital tokens on blockchain networks. As the concept gets mainstream attention, including meriting for a hearing in Congress, BlackRock’s tokenized US treasury, BUIDL, recently became the largest tokenized fund in the market.

“Tokenization is no longer a dream of the future — it’s happening now. Every asset manager and bank is looking at this technology to some extent, and moving towards integrating this massive change to the foundation of our global financial system. The term ‘real-world assets’ will soon become irrelevant, as there will be no difference. Blockchains will be where all financial assets are settled and transferred, hugely increasing accessibility all over the world,” Bernardo Quintao, Head of Business Development at Backed Finance, shared with BeInCrypto.