Goldman Sachs unveils crypto classification system, aimed at institutional investors

Goldman Sachs is making a bid to standardize the way the financial industry talks about, tracks and invests in the burgeoning universe of digital assets, CNBC is first to report.

The investment bank is set to unveil a data service created with global index provider MSCI and crypto data firm Coin Metrics that seeks to classify hundreds of digital coins and tokens so institutional investors can make sense of the new asset class, according to executives at the three firms.

“The digital asset ecosystem has really expanded over the last couple of years,” said Anne Marie Darling, head of client strategy for Goldman’s Marquee platform, in an interview. “We’re trying to create a framework for the digital asset ecosystem that our clients can understand, because they increasingly need to think about performance tracking and risk management in digital assets.”

Crypto assets exploded in value during the pandemic, reaching $3 trillion in total value last year, before contracting along with other risky assets as the Federal Reserve raised interest rates.

While skeptics including JPMorgan Chase CEO Jamie Dimon and Berkshire Hathaway CEO Warren Buffett have derided bitcoin, industry proponents say that the cryptocurrency’s recent run of lower volatility compared with traditional investments shows it is maturing as an asset class.

The new service is called Datonomy — a play on the word taxonomy, which is the branch of science concerned with naming and classifying the natural world — and can be accessed as a subscription-based data feed or through Marquee, which is Goldman’s digital storefront for institutional investors.

The three companies have divided the digital assets world into classes, sectors and subsectors, depending on how the tokens or coins are used, Darling said.

Doing so will allow money managers at hedge funds and asset management companies to be able to think about crypto in a more granular way, similar to how equities can be discussed as industry sectors like finance or technology, or themes like growth versus value stocks, she said.

Users can tap the data feed to help with analysis and research, as well as benchmarking performance, managing portfolios or creating investment products based on sectors including decentralized finance, metaverse, smart contract platforms or value transfer coins.

Large asset managers have asked for an “adult framework” to better grasp digital assets and discuss it in a consistent way, according to Coin Metrics CEO Tim Rice.

“We’ve organized it in an intuitive manner that should help asset managers come into this asset class in a much more standardized fashion,” Rice said. “This is the next phase of getting the underpinnings of the industry lined up so that everybody can embrace it and we can figure out what the next directional move in the market is.”