Introduction to the Partnership
BlackRock has officially disclosed JPMorgan Securities and Jane Street as the intended participants in its much-anticipated Bitcoin ETF. This announcement precedes the critical decision by the Securities and Exchange Commission (SEC), setting the stage for what could be a landmark development in the cryptocurrency ETF domain.
Role of Authorized Participants in ETFs
Authorized participants are instrumental in the functioning of ETFs. They have the capability to both create and redeem shares, a process that involves either an exchange of ETF shares for a basket of securities that mirror the fund’s holdings or opting for a cash transaction. The disclosure of these participants by BlackRock is seen as a significant move ahead of the SEC’s decision.
JPMorgan’s Stance on Cryptocurrencies
Intriguingly, JPMorgan CEO Jamie Dimon has been a vocal critic of cryptocurrencies, even advocating for a government ban over concerns about their legitimacy. However, the involvement of JPMorgan as an intended participant in the Bitcoin ETF marks a notable shift from Dimon’s previously expressed views.
SEC’s Anticipated Decision
Bloomberg Intelligence analysts, including James Seyffart and Eric Balchunas, suggest that the SEC is likely to approve spot Bitcoin ETF proposals, especially those that focus on cash-only creations and redemptions and have secured agreements with authorized participants. The analysts place the probability of SEC approval at around 90%, with the potential launch of a spot Bitcoin ETF as early as January.
The Wider ETF Landscape
With the SEC facing a January 10 deadline to decide on proposals by entities like ARK Invest and 21Shares, there’s a heightened sense of anticipation in the market. Despite several refilings, some firms have not yet named their authorized participants, which is expected to be revealed when filing their final prospectus.
Grayscale Investments’ Plans
In a related development, Grayscale Investments had indicated in a June 2022 report its intention to collaborate with Jane Street and Virtu Financial for its Grayscale Bitcoin Trust (GBTC) if it were to transition into an ETF. However, recent filings have not confirmed these partnerships.
