Competition for Bitcoin: Goldman Sachs evaluating to issue own Stablecoin

  • Bank giant Goldman Sachs is considering issuing its own stablecoin after the announcement of JPMorgan’s stablecoin, JPM Coin.
  • Goldman Sachs appoints new head of digital assets and increases internal development of blockchain applications.

In one of the most unexpected plot twists of the year, financial giant Goldman Sachs may issue its own stablecoin. In a report for CNBC, the news media claims that Goldman Sachs will take a new approach to the blockchain sector and the crypto market. That’s why the company appointed a new head of digital assets, Mathew McDermott.

McDermott will replace Justin Schmidt as head of that department. According to the report, Goldman Sachs’ new Head of Digital Assets has a pro-Bitcoin, cryptocurrencies, and blockchain technology position. McDermott envisions a future where the financial sector exists in a digital ledger, such as Bitcoin’s blockchain or a distributed ledger such as the XRP ledger  or IOTA‘s Tangle. He expects the traditional financial sector to become more efficient:

In the next five to 10 years, you could see a financial system where all assets and liabilities are native to a blockchain, with all transactions natively happening on chain. So what you’re doing today in the physical world, you just do digitally, creating huge efficiencies. And that can be debt issuances, securitization, loan origination; essentially you’ll have a digital financial markets ecosystem, the options are pretty vast.

McDermott added that there are many processes in the legacy financial sector that are costly and inefficient. The Head of Digital Assets believes that blockchain technology is the key to the future:

There’s a lot of legacy processes in the vast movement of collateral that makes them very cost inefficient, so by leveraging distributed ledger technology, you can standardize processes to manage collateral across the system, and you have a much more efficient settlement process given the real time settlement.

Is Goldman Sachs reconsidering its position on Bitcoin?

McDermott seems to be talking about something similar to what is happening in decentralized finances, especially on Ethereum’s DeFi sector. In recent months, this sector has attracted billions of dollars from investors. In that sense, Goldman Sachs might be reconsidering its position on cryptocurrencies like Ethereum and Bitcoin.

As CNF reported, Goldman Sachs held a conference with its clients in early June. The conference generated great expectation in the crypto community; a pro-crypto announcement from Goldman Sachs was expected. Instead, the banking giant denied Bitcoin is an asset class, criticized its volatility and advised its clients not to invest in the cryptocurrency. This caused the anger of a significant portion of the cryptocommunity and the response of Swiss Bank’s Head of Digital Assets, Chris Thomas.

Since then, the scenario has changed. Bitcoin has shown that it can survive a crisis like the coronavirus pandemic (Covid-19). In addition, one of Goldman Sachs’ biggest competitors, JPMorgan, hired Oli Harris as Head of Digital Assets. Harris has been vice president of the Ethereum-based platform, Quorum. Harris leads the development and launch of the JPM Coin that “seeks to revolutionize” the global payment system.

The new Head of Digital Assets for Goldman Sachs did not rule out a cooperation with JPMorgan. Banks could find a way to harness the potential of blockchain technology as a team. On the possibility of Goldman Sachs launching its own stablecoin, McDermott stated:

We are exploring the commercial viability of creating our own fiat digital token, but it’s early days as we continue to work through the potential use cases.

About Author

Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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