Investment giant Goldman Sachs is once again expanding its crypto exposure. But the planned investment product only partially delivers what the name promises.
Is Goldman Sachs working on an exchange traded fund (ETF) related to the Decentralized Finance (DeFi) Space? It seems likely. Because the major bank applied to the US Securities and Exchange Commission (SEC) for approval for the “Goldman Sachs Innovate DeFi and Blockchain Equity ETF”.
To the application from yesterday, July 26th, it can be seen that the planned ETF should map the “Decentralized Finance and Blockchain Index” of the German index provider Solactive. Goldman Sachs promises to invest 80 percent of the fund’s assets in securities of the companies in the index. Those are located in the USA, Europe and Asia. The New York-based bank names two “key issues” in its investment activity: “the implementation of blockchain technology and the digitization of finance.” But how much DeFi and blockchain are actually in the ETF and index?
Is Goldman Sachs serving a DeFi sham?
In order to answer the question just raised, a look at the factsheet of the associated index should actually suffice. The index mentioned in the application of the major bank (“Decentralized Finance and Blockchain Index”) cannot be found on an overview page from Solactive.
Other news sites jumped to the conclusion that the planned Goldman Sachs ETF should map the “Solactive Blockchain Technology Performance Index”. However, this does not represent companies from the crypto and DeFi space, but primarily tech giants such as Nokia, Facebook and Google.
A look into the Guideline however, this index suggests that such a conclusion is too premature. Because while Solactive only indexes companies with a market capitalization of more than 750 million US dollars, the Goldman-Sachs application mentions a minimum market capitalization of just 500 million US dollars.
The relationship between the ETF and the DeFi industry remains unclear for the time being. The high market capitalization paired with a listing on a traditional stock exchange is known as a prerequisite for the ominous index. The associated ETF is therefore likely to invest in large listed companies that are dedicated to the two “key issues” above. However, the ETF only shares the name with DeFi tokens and platforms in the narrower sense. Goldman Sachs tied us up with a marketing bear.
Grayscale is actually launching DeFi funds
Unlike Goldman Sachs, the world’s largest crypto asset manager Grayscale is actually considering getting involved in the DeFi sector. As early as June, the company named a number of DeFi tokens that it is considering for further investment funds.
On July 19, the company finally launched the Grayscale Decentralized Finance (DeFi) fund, which maps twelve cryptocurrencies from the DeFi division. The CoinDesk DeFi Index provides the database. The fund is aimed at institutional investors.