Goldman Sachs Explores the Tokenization of Financial Instruments and NFTs

Key Insights:

• Goldman Sachs looks into the tokenization of financial instruments into digital assets.
• US banks have become particularly bullish on Web3, with Goldman, JPMorgan, and Citi dishing out hefty projections.
• The increased interest comes despite a pickup in government and regulatory scrutiny.

Momentum in the digital asset space has picked up through the year. The number of industries showing interest in digital assets and the metaverse continues to rise, with no immediate signs of a slowdown.

NFT and metaverse-related trademark filings continue to grab the crypto news headlines, as do government measures to curb the uptrend in illicit activity.

For US banks, the outlook is bullish, with banks seeing Web3 as the future of the internet as we know it today.

Goldman Sachs Looks into Tokenizing Financial Instruments

This week, US banking giant Goldman Sachs announced that it is exploring the “tokenization of real assets” and NFTs.

Goldman Sachs global head of digital assets Mathew McDermott reportedly said,

“We are actually exploring NFTs in the context of financial instruments, and actually there the power is actually quite powerful. So we work on a number of things.”

Goldman Sachs is not holding back on cryptos, NFTs, and the metaverse. In January, the US investment bank reportedly called the metaverse an $8tn opportunity.

To date, Goldman Sachs has not only invested in crypto start-ups but has also offered crypto-related financial instruments, including Bitcoin (BTC) derivatives and OTC crypto-trading services.

Goldman Sachs Joins a Growing List of US Names Exploring NFTs

Since the evolution of non-fungible tokens, the subject of tokenization of assets has become a popular one. NFTs are industry agnostic, with the concept of tokenization offering boundless opportunities.

While there have been plenty of live cases of successful tokenization of assets, the tokenization of financial instruments has drawn greater interest in recent months.

This week, DeFi protocol Portal partnered with HighCircleX (HCX) to tokenize pre-initial public offering (IPO) company stocks.

Portal’s Executive Chairman Dr. Chandra Duggirala said,

“Portal is bringing real world use cases to Bitcoin. Eventually, we will see tokenization of many more financial assets onto the Bitcoin blockchain. Although these assets are not bearer assets like Bitcoin, having both digital asset securities and non-security digital assets available through a simple interface for users who meet accreditation investor criteria marks the beginning of merging Bitcoin ecosystem with mainstream finance. This also fixes the problem of liquidity fragmentation across many different exchanges and applications.”

Addressing the issue of illiquidity, the tokenized assets are then tradeable on the HCX marketplace, offering holders liquidity.

When considering the speakers at this week’s Financial Times Crypto and Digital Assets Summit, activity in the digital asset space is likely to accelerate this year.

Key speakers included politicians, founders of blockchain entities and crypto exchanges, as well as representatives from the banking sector.