Goldman Sachs became the latest fintech giant to enter the booming tokenization sector where the main focus is converting real-world assets, or rights into a digital token on a blockchain. The RWA space is rapidly gaining traction in blockchain, bridging the physical and digital realms. These initiatives target accelerating institutional adoption of digital assets, aiming to enhance liquidity, unlock investment opportunities, and improve the efficiency of financial markets.
McDermott, global head of digital assets at Goldman Sachs revealed that the firm is set to roll out three tokenization projects by the end of the year with the U.S. as its first venture. Without divulging much, Dermott stated that one of them is focused on the fund complex in the U.S., and another on debt issuance in Europe.
This isn’t the first time for Goldman Sachs, as the firm had previously worked on a bond issuance with the European Investment Bank in 2022 and tokenized a sovereign green bond for the Hong Kong Monetary Authority in 2023. Subsequently, it went on to launch the Goldman Sachs Digital Asset Platform in 2023 to allow the tokenization of assets.
Overall the RWA market could hit $10 trillion by 2030, as per market experts. With the advent of blockchain technology, this sector is primed to skyrocket, making it more efficient for moving, transacting, and verifying physical assets. Several fintech giants and regulatory bodies have realized this immense potential and are now dipping their toes into the tokenization sector.
Goldman Sachs: BlackRock and MAS Dive into Tokenization
Back in November 2023, the Monetary Authority of Singapore, or MAS, launched Project Guardian, a collaborative initiative with the financial industry to test promising asset tokenization use cases. Another notable example is BlackRock, the world’s largest asset manager, which recently applied with the SEC to launch a tokenized investment fund named the “Blackrock USD Institutional Digital Liquidity Fund” [BUIDL] on the Ethereum blockchain. Reportedly, the AUM has seeded $100 million for this venture.
As competition heats up into the burgeoning space, McDermott underscored the firm’s commitment to creating products that investors genuinely want. To ensure they understand and meet investor needs, the bank recently held a digital assets summit in London, which was attended by over 500 clients.
“There’s no point doing it just for the sake of it,” he told Fortune. “The definite feedback is, this is something that actually will change the nature of how they can invest.”