Goldman Sachs makes big bet on blockchain, appoints new head for digital assets

Goldman Sachs has announced the appointment of Matthew McDermott as the new global head of its digital assets sector to promote its interest in Blockchain.

By · Aug 8, 2020 . 6min read

Goldman Sachs plans to venture into Blockchain

Institutional Investor Goldman Sachs has named Matthew McDermott as the head of its digital assets sector. He is an internal hire who ran the banks’ internal funding operations previously.

McDermott joined Goldman from Morgan Stanley back in 2005. He became head of cross-asset financing. Therefore, he took advantage of the repo and debt issuance markets to help fund Goldman’s trading activities. He is currently based out of London.

McDermott is the one who believes in the blockchain. He believes that shortly all of the world’s financial assets will be registered on an electronic ledger. He also thinks that activities like IPO’s and debt issuance can be automated. Currently, these activities require the attention of numerous bankers and lawyers to execute it correctly.

“In the next five to 10 years, you could see a financial system where all assets and liabilities are native to a blockchain, with all transactions natively happening on chain. So what you’re doing today in the physical world, you just do digitally, creating huge efficiencies. And that can be debt issuances, securitization, loan origination; essentially you’ll have a digital financial markets ecosystem, the options are pretty vast.”

Goldman recently published a report that deemed Bitcoin does not belong to any asset class. This prompted widespread criticism from the crypto community, and most notably from the Winklevoss twins. The appointment of McDermott, however, shows that Goldman is slowly changing its tune on the matter.

A Deloitte report showed that leaders around the world find that distributed ledgers like blockchain are convincing for the future.

McDermott’s aims and objectives

McDermott has plans to expand his team twofold. He has already started hiring in Asia and Europe. He has also managed to onboard Oli Harris, a key member in the development of JP Morgan Chase’s JPM Coin.

McDermott’s initial goals include making the repo market go digital. He is also considering how ledger technology can be used in the credit, mortgage, and trading markets. McDermott is aware that for any of this to work, there needs to be a consensus amongst all the other big banks as well. He has already been engaging in talks with the likes of JP Morgan and Facebook to achieve this. Moreover, Facebook was recently subject to force by the regulators to change its cryptocurrency strategy.

Furthermore, McDermott confirmed that Goldman would be exploring the possibility of producing their own coin.

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