Goldman Sachs Files for “DeFi” and Blockchain Equity ETF

Goldman Sachs’ proposed fund aims to focus on companies aligned with “the implementation of blockchain technology and the digitalization of finance”

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key takeaways

  • The eligible markets Goldman Sachs is considering for investment include: Australia, Canada, France, Germany, Hong Kong, Japan, South Korea, Switzerland, the Netherlands, the United Kingdom and the United States
  • Despite delays from the SEC in approving approximately a dozen bitcoin ETFs, fund management firms continue to submit applications

One week after Grayscale unveiled its DeFi fund, Wall Street giant Goldman Sachs threw its hat into the DeFi ring by filing its “Innovate DeFi and Blockchain Equity ETF,” according to a US Securities and Exchange Commission filing on Monday. 

The exchange-traded fund aims to closely track the Solactive Decentralized Finance and Blockchain Index, which is not currently listed as one of the German-based index provider’s offerings.

Solactive offers a separate index, the Solactive Blockchain Technology Performance-Index, which invests in companies such as Nokia, Facebook, Alphabet, Accenture, Visa, Mastercard, PayPal, IBM, among others. No direct cryptocurrency holdings are included in the Solactive index.

The fund managers will be Managing Director Raj Garigipati and Portfolio Manager Jamie McGregor, the filing stated. According to the filing, Garigipati joined the ETF Portfolio Management team in 2015 and prior to joining that team, he was the chief risk officer of the Quantitative Investment Strategies team at Goldman Sachs since 2011. McGregor joined the Goldman Sachs Asset Management division in 2015 and before that he was a portfolio manager at Guggenheim Investments since 2007, it said. 

The eligible markets Goldman Sachs is considering for investment include: Australia, Canada, France, Germany, Hong Kong, Japan, South Korea, Switzerland, the Netherlands, the United Kingdom and the United States. 

“At this time we don’t have a further comment beyond the filing,” a Goldman Sachs spokesperson said in an email to Blockworks on Tuesday.

Nate Geraci, president, The ETF Store told Blockworks, “Goldman Sachs adds to the rapidly-growing list of ETF issuers offering or pursuing so-called ‘blockchain ETFs’. The proliferation of these ETFs is directly attributed to the SEC failing to approve a bitcoin ETF. Issuers are well-aware of the insatiable investor demand for exposure to the price of bitcoin and broader crypto ecosystem. With the SEC failing to approve bitcoin ETFs, issuers are creating workaround products. The aggressiveness with which issuers are now launching blockchain ETFs also indicates there is some pessimism around the SEC getting comfortable with a bitcoin ETF anytime soon.”

Despite delays from the SEC in approving over a dozen bitcoin ETFs, fund management firms continue to submit applications.

Just last week, Global X submitted its application for a bitcoin ETF one week after it launched a blockchain ETF. Valkyrie has taken a similar approach as Global X while Viridi Funds launched an ETF solely focused on allocating capital toward cryptocurrency miners using more sustainable sources of energy. 

“Sponsors continue to file for bitcoin ETFs and some like Global X and VanEck are doing both [bitcoin and blockchain],” Neena Mishra, director of ETF research for Zacks Investment Research, told Blockworks on July 22. “In case a bitcoin ETF is not approved, then at least they have one product which can have indirect exposure to crypto to their clients.”

During The B-Word event last week, SEC Commissioner Hester Peirce admitted she never “imagined” that the US would be outpaced by other countries in approving ETFs.

Separately, Sen. Elizabeth Warren gave the SEC a deadline of July 28 to respond to questions she had about crypto exchanges and regulatory changes. Her request could mean a bitcoin ETF hits the US market sooner rather than later.

This story was updated on July 27, 2021, at 10:25 am ET.

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