With the recent interest shown by Goldman Sachs towards Ethereum and the broader DeFi ecosystem lately, it is forging ahead to roll out a DeFi ETF if approved by the SEC.
According to a filing today with the Securities and Exchange Commission (SEC), it's ready to offer an exchange-traded fund (ETF) linked to companies in the sector. Dubbed Goldman Sachs Innovate DeFi and Blockchain Equity ETF, the exchange-traded fund will provide investors with exposure to companies "aligned with the themes" of blockchain technology and the "digitalization of finance," says the bank.
The SEC doesn’t shy away from turning down ETF filings submitted at its desk by companies seeking to float the investment tool to their customers. Although other jurisdictions like its neighbour Canada have approved an Ethereum ETF while some European nations have gone ahead to approve Bitcoin ETFs, the SEC continues to maintain its stance of not being ready for any formal SEC approval.
An ETF is an investment product that tracks an asset or group of assets and can be traded like a stock on traditional exchanges. But Goldman Sachs looks to flip it right on its head and perhaps accelerate the chances of the SEC approving the first-ever crypto ETF.
Goldman Sachs' proposal will be linked to company stocks rather than crypto assets, which may stand a better chance of success, even though investors and the SEC alike don't yet know what's in it. Per the filing report, Goldman Sachs says the fund will be designed to correspond to "the performance of the Solactive Decentralized Finance and Blockchain Index."
But a quick look at the companies that make up the index funds only lists companies without any or strong interest in crypto save for payment processors like Mastercard and PayPal. The others have never shown any real interest in cryptocurrencies. Leading the pack in Solactive's Blockchain Technology Performance Index features Nokia, Facebook, Google parent company Alphabet, Mastercard, and PayPal. In a nutshell, the fund will have zero crypto natives listed as part of it even though Coinbase and MicroStrategy are credible options for consideration.
Perhaps, the investment banker doesn’t want to muddle its chance of getting approval from a rigid SEC, hence, a list without any crypto native company. Moreover, another obvious miss out from the list is financial institutions that act as intermediaries for global business transactions that keeps the world’s economy moving through banking, lending, trading etc.
Nonetheless, this wouldn’t be Goldman Sachs first foray into anything crypto. Just last month, the investment banker participated in a funding round that helped Blockchain infrastructure firm Blockdaemon raise $28 million alongside other investors including venture capital firm Greenspring Associates, crypto lending platform BlockFi, boutique venture capital fund Warburg Serres. Blockdaemon works to help companies install and use blockchain applications especially within the DeFi ecosystem. One would think Goldman Sachs would rather be averse to DeFi that seeks to replace traditional banks but not in the least with the top investment banker which is now pushing to launch a DeFi ETF.