Goldman Sachs: The New ‘DeFi’ ETF Is Anything But…

The proposed fund by the company is called Goldman Sachs Innovative DeFi and Blockchain Equity ETF. This fund’s main aim is to track the decentralized financial and blockchain indexes of Solactive, a German financial index provider. This fund is going to invest about 80% of the assets in securities, stocks, and certificates of deposit included in the index. The filing asks that the index should provide companies with opportunities to enter two key areas: “introduction of blockchain technology” and “digital financing”.

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As of July 23, Nokia, Facebook, Google, Accenture, and Fujitsu are the largest stocks in the Solactive Decentralized Finance Index, each accounting for approximately 6% to 7% of the index. Companies such as PayPal, Microsoft, Visa, and Overstock consist of comparatively smaller shares of the index. Moreover, Solactive also tracks China’s Alibaba, Tencent, and Baidu among the 20 assets in its DeFi index. Fans of DeFi index crypto products may get disappointed by the approach behind the Solactive Index. This approach requires all the firms to be listed on a regulated exchange. It should have a market capitalization of more than $500 million. It also requires an average daily trading volume of at least 500 million U.S. dollars reached in the past six months.  The Solactive Index is recalculated and rebalanced on the third Friday of February, May, August, and November every quarter.

A lot of institutions are now increasingly turning to the DeFi field. Also, Grayscale, the leading crypto asset management company disclosed its plans to launch a decentralized financial fund last week. Grayscale’s DeFi fund will provide organizations with blue-chip tokens from the DeFi field. It will also include the leading protocol governance tokens such as Uniswap and Aave. Aave, DeFi’s main currency market, also tried to raise institutional capital. They did this by introducing a pool of authorized institutions earlier this month. Goldman Sachs, the leading investment bank, has submitted an ETF application to the US Securities and Exchange Commission. This will help them provide access to public companies that are related to the decentralized financial sector.