Goldman Sachs Group, Inc. (GS.US) plans to spin off its digital asset platform to promote the commercial application of blockchain technology.

According to reports, Goldman Sachs Group, Inc. (GS.US) is currently in talks with potential partners as the company plans to spin off its digital assets platform into a new company for large financial institutions to create, trade, and settle financial instruments using blockchain technology. Mathew McDermott, global head of digital assets at Goldman Sachs Group, Inc., said in an interview that the firm is negotiating with several market participants about these plans as it continues to build out the platform's functionalities and develop new business use cases. McDermott stated that the plan for the new company is still in the early stages, but the long-term goal is to execute the spin-off within the next 12 to 18 months, depending on regulatory approvals. He said, "having something owned by some of the industry is in the best interest of the market." Electronic trading platform Tradeweb Markets Inc. (TW.US) announced that it will partner with Goldman Sachs Group, Inc. to bring new business use cases to the digital assets platform, becoming its first strategic partner. As Goldman Sachs Group, Inc. plans unfold, large financial institutions and governments are trying to leverage technology supporting cryptocurrencies to issue, trade, and settle traditional assets such as cash or bonds faster and more efficiently. Since Trump's victory in the U.S. presidential election earlier this month, cryptocurrencies have been soaring as investors bet on his stance on digital assets bringing new momentum to the industry. In addition, McDermott stated that Goldman Sachs Group, Inc. is seeking to facilitate secondary market trading for private digital asset companies for its clients. He mentioned that this could make it easier for family offices and other clients seeking liquidity to access funds, while buyers can take advantage of discounts in the private markets. He added that the bank is also looking into resuming its lending activities supporting Bitcoin. Goldman Sachs Group, Inc. introduced its digital assets platform in 2022 as a way to issue traditional assets using blockchain technology, and the platform has since been used for transactions including issuing bonds for the European Investment Bank. McDermott stated that while the goal is to transfer the technology platform to a new entity, Goldman Sachs Group, Inc. will retain its digital assets team and continue to expand its broader activities in the field. The bank has a history of spinning off internally developed software platforms. In 2013, it spun off electronic trading software group REDi Technologies, and a few years later spun off structured investment market Simon, which was part of the bank's Marquee platform. Wall Street's blockchain efforts have been ongoing for about a decade, and while some applications are now live, few have reached significant scale. Part of the reason is companies are hesitant to participate in systems created by competitors. According to McDermott, the goal is for a digital assets platform owned by the industry to expand its utility, such as tokenizing funds used as collateral through blockchain. McDermott said, "If you want to build a scalable market, you want credible strategic participants to embrace this technology. You want a digital that is flexible enough to operate under the drive of business use cases."