Goldman Sachs Continues Foray into Digital Assets with Tokenization Platform
Two years ago, Goldman Sachs (GS) labeled Bitcoin as an asset class, marking one of the first real signs of institutional adoption at the time. One year ago, representatives from GS spoke to the potential of digital securities through the tokenization of real world assets. Fast forward to present day and, despite being expected to lay off more than 3,000 employees this week, GS continues its foray into the digital asset sector with the launch of ‘GS DAP’.
What is it?
Goldman Sachs Digital Asset Platform or ‘GS DAP’ is a tokenization platform that facilitates the creation, issuance, and management of digital securities. Whether this means the tokenization of real worlds asset like real estate, or other mediums including debt products, and more.
Goldman Sachs notes that this new service is “…developed on top of Digital Asset’s Daml smart contract language and Canton, its privacy-enabled blockchain”.
Par for the course with digital securities, is the ability to provide increased transparency, privacy, and of course imbuing tailor-built rights and obligations in to the associated smart-contracts.
Upon announcing the launch of GS DAP, Mathew McDermott, Global Head of Digital Assets at Goldman Sachs, spoke on what it means.
“Our goal from the outset has been to help our clients realize the benefits of end-to-end digital lifecycle processing across tokenized assets, digital currencies, and other financial instruments…We are pleased to bring this Daml-based solution to market and continue to find efficiencies that will improve the velocity of transactions. For example, by reducing the typical bond issuance settlement time for the European Investment Bank from T+5 to T+0 at a speed of sub-60 seconds with cross-chain atomic Delivery versus Payment (DvP) settlement in this inaugural issuance, we show how transformative this technology can be to the financial markets.”
In his commentary, McDermott touches on one of the main benefits that blockchain is able to provide in such implementation – settlement speeds. By bringing this down from days to literal seconds, investors can soon expect a huge increase in market efficiency as digital securities take off.
Hot out of the Gate
Right out of the gate, GS DAP is able to boast a modest level of adoption with the European Investment Bank (EIB) expected to issue what is being call the first ‘fully digitally native bond with same day settlement’.
This particular offering is set to be a two-year bond valued at €100M. EIB indicates that it is also set to be, “…admitted on the Luxembourg Stock Exchange’s Securities Official List”.
EIB has taken to calling this endeavour ‘Project Venus’ and notes that while it is its second example of a tokenization effort, it is the first to occur on a private blockchain.
While Goldman may be ahead of the times among most institutional investment firms, there is one rival which appears to share a similar vision with regards to the tokenization of real world assets – BlackRock.
It was just over a month ago that BlackRock CEO, Larry Fink, sat down for a conversation at the DealBook Summit. Here he made it clear that the future of investing lay in digital securities. At the time, he stated,
“I believe this technology [DLT] is going to be very important…I believe the next generation for markets, the next generation for securities, will be tokenization of securities.”
Much like McDermott in his commentary on GS DAP mentioned above, Fink noted various reasons for this including instantaneous settlements.
Unfortunately, most group together the various asset classes which make up the digital asset sector. Whether this be Bitcoin, crypto, NFTs, or digital securities – each have had their reputation tarnished as of late with the plethora of scams and collapses that have come to fruition. Fortunately, there are still companies that are able to look beyond this, separating the wheat from the chaff, and have begun to build out the potential behind digital securities.
Asset classes like meme coins, and NFTs have each had their time in the spotlight. Now, with increased focus being placed on regulations and real-world utility, it is time for digital securities to experience the same.