Newly revealed partnerships with Jane Street and JPMorgan Securities could pave the way for BlackRock's entry into the Bitcoin ETF market in the US.
In a notable revelation on Friday, BlackRock, the financial titan, has shared pivotal details regarding its ambitious bitcoin ETF initiative. The firm has identified JPMorgan Securities and Jane Street as the preferred authorized participants (APs) in its recent filing, contingent on receiving the green light from the Securities and Exchange Commission for its proposed fund.
APs are crucial cogs in the ETF machinery, responsible for the creation and redemption of ETF shares. They have the unique ability to exchange these shares for a corresponding set of securities that mirror the ETF's underlying assets, or alternatively, for cash.
Industry observers, including James Seyffart and Eric Balchunas of Bloomberg Intelligence, have been meticulously tracking new S-1 filings to uncover which institutions are being selected as APs. This detail is generally regarded as one of the final pieces of the puzzle before the SEC arrives at a decision.
Balchunas, in a recent analysis, suggested that the SEC is poised to greenlight spot bitcoin ETF proposals that exclusively undertake cash-only transactions for creations and redemptions and have secured agreements with APs. Both Seyffart and Balchunas are optimistic, estimating a 90% likelihood that the SEC will approve some spot bitcoin ETFs in the early part of January. The SEC is set to make a decision on proposals from Ark Invest and 21Shares by January 10, with other similar proposals also in the queue.
Meanwhile, other contenders in the race like Ark and 21Shares, along with VanEck, have updated their S-1 filings. However, these firms have yet to announce their chosen APs, a step typically reserved for the final prospectus stage.
“Essentially meaning they can go live. [It’s] in there that an AP/underwriter would theoretically have to be named (along with fees and other details),” Seyffart noted in a comment on X.
Previously, Grayscale Investments had eyed Jane Street and Virtu Financial as APs for its Grayscale Bitcoin Trust's potential ETF conversion, as confirmed by a Grayscale spokesperson following a Bloomberg report in June 2022. Yet, in its most recent S-3 filing, Grayscale has not listed these firms as APs, and representatives have not elaborated further.
As BlackRock positions itself with Jane Street and JPMorgan Securities at its side, the financial community watches with bated breath, anticipating the potential reshaping of the Bitcoin ETF landscape in the United States.
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