Goldman Sachs’ latest initiative aims to reshape institutional trading through blockchain technology. The Wall Street powerhouse announced plans to spin off its proprietary blockchain-based platform, GS DAP, into an independent industry-owned entity, according to an announcement Monday.
The decision to separate GS DAP from Goldman Sachs aims to address a persistent challenge in the adoption of private blockchain solutions: the industry’s reluctance to adopt platforms owned by competitors, according to the company. By transforming GS DAP into an independent entity, Goldman seeks to attract broader institutional participation, ensuring a more inclusive and scalable solution for the financial industry.
“We see distributed permissioned technologies as the next structural change in financial markets and are already demonstrating the importance of the perceived benefits of the technology. » Mathew McDermott, global head of digital assets at Goldman Sachs, said in the announcement.
Private Blockchain, Industry-Wide Impact
GS DAP, launched in late 2022, leverages private blockchain technology to tokenize financial assets, such as bonds, and reduce the time required for settlement. Unlike public blockchains like Ethereum and Solana, private blockchains require permissions to send transactions, providing a level of control often favored by financial institutions.
Goldman has partnered with Tradeweb Markets, a leading electronic trading platform, to expand the use cases of GS DAP. The collaboration demonstrates growing interest in leveraging blockchain for applications such as tokenizing funds, issuing collateral, and conducting more efficient financial transactions.
McDermott highlighted the benefits of the split for the entire industry: “Delivering a distributed technology solution to a broad range of financial market participants has the potential to redefine market connectivity, infrastructure composability and deliver a new set of business opportunities for buyers and sellers . We see this as an important next step for our industry as we continue to grow our digital asset offerings for our clients.
Private blockchains have gained traction among U.S. banks due to the regulatory challenges associated with public blockchain platforms. A 2022 SEC rule, SAB-121, imposes strict accounting requirements for the protection of crypto assets, thereby limiting the use of public blockchains. As a result, many institutions, including Goldman Sachs, have focused on permissioned systems to remain compliant while exploring the potential of blockchain technology.
However, the regulatory landscape could change. As President-elect Donald Trump announces plans to take a more pro-crypto stance, there is cautious optimism about changes that could enable broader adoption of public blockchains for institutional trading.
Expanding the Role of Blockchain in Finance
Goldman’s move comes amid a wave of institutional interest in blockchain and crypto. The approval of spot Bitcoin ETFs and the growing recognition of tokenized assets have increased confidence in the technology. Other Wall Street players, including JP Morgan, have also invested in private blockchain initiatives, but adoption has remained limited due to competition concerns.
By making GS DAP a standalone entity, Goldman hopes to overcome these obstacles and pave the way for greater collaboration within the financial industry. The company said it will continue to grow its internal digital assets business and pursue blockchain applications, signaling a dual strategy to advance the integration of blockchain into traditional finance.
Goldman Sachs prepares to launch three tokenization projects by the end of the year
Goldman Sachs plans to launch three tokenization projects by the end of the year, with potentially more crypto-related products if regulations allow after the election.
