Grayscale Investments, a prominent crypto asset manager, is reportedly in discussions with major financial institutions, including JPMorgan and Goldman Sachs, regarding their potential involvement as authorized participants in its proposed spot Bitcoin Exchange-Traded Fund (ETF).
This development follows Grayscale’s recent filing of an amended S-3 application with the U.S. Securities and Exchange Commission (SEC), which did not specify any authorized participants for the proposed ETF.
JPMorgan and Goldman Sachs in talks with Grayscale
According to sources familiar with the matter, Bloomberg reported that Grayscale Investments has engaged in talks with both JPMorgan and Goldman Sachs for their potential roles as authorized participants in the proposed spot Bitcoin ETF. W
hile Grayscale’s recent SEC filing did not name any authorized participants, discussions with these major financial institutions indicate the seriousness of Grayscale’s intent to launch a Bitcoin ETF.
Role of authorized participants in ETFs
Authorized participants play a pivotal role in the operation of an ETF, as they facilitate the creation and redemption of shares within the fund. By allowing the entry and exit of shares, these participants help maintain the ETF’s price in line with the underlying asset, in this case, Bitcoin. ETF issuers often select multiple financial firms to act as authorized participants to enhance market liquidity.
Goldman Sachs and BlackRock in talks for separate ETFs
In a separate development, Goldman Sachs is reportedly in discussions with BlackRock to serve as an authorized participant for BlackRock’s own proposed ETF. BlackRock had previously amended its S-1 filing to name quantitative trading firm Jane Street and JPMorgan as authorized participants for its Bitcoin ETF. Goldman Sachs, historically known for its neutral stance toward cryptocurrencies, recognizes the significance of a Bitcoin ETF approval in bringing maturity and institutional investment to the digital asset sector.
ETF approval prospects
It’s worth noting that a spot Bitcoin ETF has not received approval in the United States thus far. Nevertheless, ETF analysts are increasingly optimistic about the likelihood of approval, estimating a 90% chance before January 10 of this year. Currently, 14 asset managers are actively pursuing the issuance of a spot Bitcoin ETF in the United States, aiming to provide institutional investors with direct and regulated exposure to Bitcoin.
The potential involvement of financial giants like JPMorgan and Goldman Sachs as authorized participants in Grayscale’s and BlackRock’s Bitcoin ETFs underscores the growing institutional interest in cryptocurrency markets. If approved, these ETFs could serve as significant milestones in the broader adoption of cryptocurrencies, attracting more institutional investments into the digital asset sector.
