Just days after we learned that Goldman is quietly clearing and settling cryptocurrency exchange-traded products for some hedge fund clients in Europe, on Monday the bank which has been increasingly ramping up its exposure to crypto currencies in recent months, filed an application with the SEC for a crypto ETF, and not just any ETF but one that would offer exposure to public companies in decentralized finance (defi) and blockchain around the globe.
Yes, Goldman very unironically wants to offer clients exposure to the same defi technology whose only purpose is to make banks such as Goldman Sachs obsolete by decentralizing all financial transformation functions and services.
It just hit me the irony of Goldman investing in DeFi.— Eric Balchunas (@EricBalchunas) July 26, 2021
According to the the filing, the fund will invest at least 80% of its assets (exclusive of collateral held from securities lending) in securities included in the Solactive Decentralized Finance and Blockchain Index, which will deliver exposure to companies that are aligned with two key themes, the implementation of Blockchain Technology and the Digitalization of Finance.
- Blockchain Technology is defined as the technology underlying distributed ledgers applicable to payments, currencies and other fields and industries that depend on a trusted intermediary.
- Digitalization of Finance is defined as the digital transformation of traditional financial services, including the support and delivery of payments, transaction services, lending and insurance.
“The Goldman Sachs Innovate DeFi and Blockchain Equity ETF (the ‘Fund’) seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Solactive Decentralized Finance and Blockchain Index (the ‘Index’),” the filing said, adding that it would focus at markets in Australia, Canada, France, Germany, Hong Kong, Japan, South Korea, Switzerland, the Netherlands, the United Kingdom and the United States.
While it is unclear which names will comprise the Solactive Decentralized Finance and Blockchain Index, a quick look at the Solactive Blockchain Technology Performance-Index reveals the following constituents. One can hope that Solactive and/or Goldman are a bit more selective in their stock picking.
With its filing, Goldman joins a long line of Wall Street entities hoping to be the first to market with a blockchain ETF. According to CoinDesk, the SEC is currently reviewing over a dozen bitcoin ETF applications and has delayed decisions on several of them. And while both VanEck and WisdomTree have filed for Ethereum ETFs, Goldman’s filing is the first DeFi-related ETF application.
Goldman's filing comes just days after Goldman's inaugural survey of more than 150 family office decision makers found that only about 15% of respondents globally have indicated to have existing investments in cryptocurrencies, while almost half are considering initiating exposure not only to cryptocurrencies but also to innovation in the digital assets ecosystems through private investments.
"Of the approximately two-thirds of family offices that are actively thinking about an increase in inflation, digital assets emerged as one portfolio solution. Currency debasement has also been top of mind for about 40% of global respondents, with more than 40% of the subset indicating they would consider investing in digital assets"
And sure enough, if clients want exposure to digital assets, Goldman is happy to deliver it to them.