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Goldman Sachs, a leading financial institution, predicts a significant increase in the trading volume of blockchain-based assets within the next one to two years, according to Mathew McDermott, global head of assets banking digital. McDermott highlighted growing interest from clients in crypto derivatives trading, especially as anticipation builds around the potential approval of a spot bitcoin ETF by U.S. regulators Ky.
experienced a significant increase of more than 50% this quarter, attracting attention from institutional clients such as hedge funds and asset managers. McDermott’s focus goes beyond cryptocurrencies, though, as he sees a “huge appetite” for digital assets, which has expanded significantly over the past year. He is particularly interested in developing blockchain-based tokens that can represent traditional assets such as bonds.
The use of blockchain technology in financial markets could lead to improved operations and payment efficiency, according to McDermott. He suggested that blockchain could enable faster and more accurate transfers of collateral and liquidity between parties. However, despite these potential benefits, integrating blockchain into financial market infrastructure on a large scale will require a significant technological overhaul.
Australia’s stock exchange, which has been working to integrate blockchain into its software platform for seven years, recently paused the project and announced that the upgrade would no longer use blockchain technology. Furthermore, while there have been pilot projects to issue blockchain-based bonds, these have yet to lead to regular issuance or the establishment of a liquid secondary market.
McDermott predicts a notable increase in on-chain trading over the next few years and envisions these markets reaching scale in three to five years. However, he also believes that the complete transition of financial markets to blockchain is still a distant prospect.
A Goldman Sachs survey conducted in September found that 16% of respondents predicted more than 10% of the financial market would be tokenized in the next three to five years. Goldman Sachs currently operates a crypto derivatives trading desk for institutional clients as part of its FX division, although it does not trade the underlying assets. McDermott noted growing interest in crypto derivatives as the market reacted positively to the prospect of a bitcoin ETF, although he did not expect the ETF’s approval to cause a surge in demand. immediate increase in liquidity and prices. However, the prospect of trading a familiar product that can scale is seen as a positive development for attracting new institutional investors to the asset class.
Reuters contributed to this article.
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