The surge in cryptocurrency market activity isn’t just driven by retail traders chasing quick gains. Behind the scenes, institutional interest is rapidly reigniting—and according to Goldman Sachs, hedge funds are returning to digital assets with renewed vigor.
Max Minton, Head of Digital Assets for Asia Pacific at Goldman Sachs, recently revealed that the approval of spot Bitcoin ETFs in the United States has significantly boosted client interest and trading volumes. While retail investors often grab headlines with their “YOLO” (you only live once) bets on volatile assets, a more sophisticated wave of capital is now flowing back into the space—this time from large institutional players.
Institutional Demand on the Rise
Minton emphasized that the bank’s largest clients—including major hedge funds—are actively re-engaging with the crypto market. “Interest had been relatively quiet last year, but since the beginning of 2025, we’ve seen a clear uptick in client activity,” he said.
This resurgence is largely fueled by the regulatory green light for spot Bitcoin ETFs, which has lowered barriers to entry for institutions wary of direct exposure to volatile and unregulated digital asset exchanges. With ETFs offering a compliant, exchange-traded vehicle, traditional finance (TradFi) firms can now gain exposure without handling custody or navigating complex blockchain infrastructure.
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Expanding Client Base Beyond Hedge Funds
While hedge funds remain a core segment, Goldman Sachs is also broadening its digital asset services to other institutional players. These include asset managers, private banking clients, and even native digital asset firms seeking connections to traditional financial markets.
The bank launched its crypto trading platform in 2021 and currently offers cash-settled Bitcoin and Ethereum options, as well as futures contracts listed on the Chicago Mercantile Exchange (CME). Notably, Goldman does not trade or hold underlying cryptocurrencies directly—instead, it facilitates derivatives transactions that allow clients to gain price exposure while staying within established risk and compliance frameworks.
Strategic Use Cases Driving Adoption
Clients aren’t just speculating. According to Minton, institutional investors are leveraging crypto derivatives for three primary purposes:
- Directional bets – Taking long or short positions based on macroeconomic outlooks.
- Yield enhancement – Using options strategies to generate premium income in sideways markets.
- Hedging – Offsetting risks in other parts of their portfolios, especially amid inflationary pressures and geopolitical uncertainty.
Bitcoin remains the dominant focus, but interest in Ethereum is growing. Minton noted that demand for Ethereum-based products could accelerate if U.S. regulators approve a spot Ethereum ETF—an outcome many expect could happen in late 2025 or early 2026.
Building the Future: Tokenization and Blockchain Infrastructure
Beyond trading, Goldman Sachs is actively investing in the foundational layers of the digital asset ecosystem.
The bank has developed GS DAP (Goldman Sachs Digital Asset Platform), a proprietary system designed to support the tokenization of traditional financial instruments such as bonds, equities, and fund shares. Tokenization enables fractional ownership, faster settlement, and improved liquidity—key advantages over legacy systems.
Recently, Goldman participated in a pilot program involving a blockchain network that connects banks, asset managers, and exchanges. The test aimed to streamline post-trade processes and reduce counterparty risk through real-time settlement—a potential game-changer for capital markets efficiency.
Strategic Venture Investments in Web3
Goldman isn’t just building internally—it’s also backing external innovation. Through targeted venture investments, the firm is supporting blockchain infrastructure startups that align with its long-term vision for financial market evolution.
“We maintain a strategic portfolio,” Minton explained. “When a company plays a critical role in shaping the future of digital asset market structure, we consider investment as part of our broader ecosystem development.”
These investments focus on areas like decentralized identity, secure custody solutions, cross-chain interoperability, and regulatory technology (RegTech)—all essential components for scalable and compliant Web3 adoption.
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Frequently Asked Questions (FAQ)
Why are hedge funds returning to crypto now?
Hedge funds are coming back due to increased regulatory clarity, particularly the approval of spot Bitcoin ETFs. These products offer a compliant way to gain exposure without operational complexity, making crypto more accessible within traditional risk frameworks.
Does Goldman Sachs hold actual Bitcoin or Ethereum?
No. Goldman Sachs does not custody or trade underlying cryptocurrencies. Instead, it offers derivatives like cash-settled options and futures, allowing clients to gain price exposure through regulated instruments.
What is tokenization, and why does it matter?
Tokenization is the process of converting real-world assets (like bonds or real estate) into digital tokens on a blockchain. It enables faster settlement, 24/7 trading, fractional ownership, and greater transparency—transforming how financial markets operate.
Could a spot Ethereum ETF boost institutional adoption?
Yes. Similar to Bitcoin ETFs, a spot Ethereum ETF would provide a trusted entry point for institutions. Approval would likely lead to increased demand for Ethereum derivatives and related financial products.
How are crypto derivatives used beyond speculation?
Institutions use crypto derivatives for hedging portfolio risk, generating yield via options writing, and expressing macroeconomic views—just like traditional derivatives, but with exposure to digital asset price movements.
Is Goldman Sachs planning to launch its own cryptocurrency?
There is no public indication that Goldman Sachs plans to issue a native cryptocurrency. Its focus remains on facilitating access to existing digital assets through regulated financial products and advancing blockchain applications in traditional finance.
The Road Ahead: Bridging TradFi and DeFi
As the lines between traditional finance and decentralized finance (DeFi) continue to blur, institutions like Goldman Sachs are positioning themselves as bridges between these worlds. By combining rigorous compliance standards with cutting-edge blockchain innovation, they’re helping shape a more inclusive, efficient, and resilient financial system.
With growing demand from hedge funds, expanding use cases for derivatives, and strategic bets on tokenization and infrastructure, the institutional crypto comeback is well underway.
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Whether you're an investor tracking institutional trends or a builder shaping the future of finance, one thing is clear: the era of digital assets is no longer coming—it's already here.