Mathew McDermott in charge of Goldman Sachs' cryptocurrency dream

In a bid to push into Wall Street’s digital future, Goldman Sachs has reportedly made Mathew McDermott, a managing director who ran the investment bank’s internal funding operations, its new global head of digital assets.

McDermott’s appointment means the newest face of blockchain and cryptocurrency on Wall Street isn’t a starry-eyed bitcoin evangelist or ostentatious start-up founder, but a 46-year-old veteran of old-school financing markets, CNBC reported. He comes in place of Justin Schmidt, a former cryptocurrency trader who was recurited by Goldman Sachs in 2019 when the nascent industry was booming with record prices. 

The company is considering the possibility of creating a new trading desk that would make markets in cryptocurrency.

London-based McDermott, according to CNBC, has a radical vision for the markets: A future in which all of the world’s financial assets reside on electronic ledgers, and activities that today require squadrons of bankers and lawyers like initial public offerings and debt issuances could be largely automated.

“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,” McDermott was quoted as saying in an interview. “So what you’re doing today in the physical world, you just do digitally, creating huge efficiencies. And that can be debt issuances, securitisation, loan origination; essentially you’ll have a digital financial markets ecosystem, the options are pretty vast.”

Contrary to Schmidt’s background, McDermott has been a heavyweight within the mainstream financial community. As reported by Finance Magnets, he is a member of the Bank of England’s Money Market Committee and also board member of the International Securities Lending Association.

Goldman Sachs has been clearing CBOE and CME Bitcoin futures contracts for over two years now and is providing clients liquidity for those futures. As for physical bitcoin, its top executive repeatedly said the bank appears unlikely to fully support the underlying cryptocurrencies until it has the backing of the US regulators.

The company’s movements are closely watched in blockchain and crypto circles as proponents have seized on anything the bank does as evidence of the technology’s broader adoption, CNBC said. The bank recently drew the ire of the Winklevoss twins, co-founders of the cryptocurrency exchange Gemini, for a report from its consumer and investment management division that declared that bitcoin isn’t an asset class.

As hype and media coverage of the space has cooled down, there are signs of growing conviction among business leaders that distributed ledgers, including blockchain, will have a real impact, according to a global survey by Deloitte. Enterprise applications were a bright spot as funding for blockchain-related start-ups fell 28 per cent last year from $4.3 billion in 2018, according to CB Insights.