As the deadline approaches, Grayscale Investments is reportedly in discussion with both Goldman Sachs and JPMorgan regarding their potential role in a spot Bitcoin ETF. On January 4th, anonymous sources revealed that Grayscale Investment had talks with both firms regarding the proposed ETF role. According to the source, Grayscale wants to play a vital role in the creation and redemption of spot Bitcoin ETF shares once approved by the SEC. However, both JPMorgan and Goldman Sachs are considered authorized participants (AP) in the same role that Grayscale wants to vie for.
This development follows a week when Grayscale Investment submitted its S-1 application without specifying its authorized participant. Being an authorized participant allows institutions to facilitate the creation of ETF shares by exchanging them for the underlying assets, in this case, Bitcoin. Additionally, the AP is also authorized to conduct ETF price tracking on the asset and provide liquidity. However, reports suggest that Goldman Sachs was previously in discussion with Blackrock to secure an authorized participant position.
Blackrock had mentioned JPMorgan and Jane Street as its authorized participants in its S-1 application in its ETF proposal. Additionally, JPMorgan had mentioned Jane Street has its AP, but there is a chance of Goldman Sachs joining the bigger Jane Street that has been awarded the AP role for various firms.
Exchange-Traded Funds (ETF) to Catalyze Crypto Market
Recent interactions with the Security and Exchange Commission (SEC) and several ETF proposal candidates have sparked optimism about the approval of the ETF. Moreover, the ETF issuers and the crypto community are hopeful that the deadline set by the SEC will bring a positive outcome. With the ongoing search for regulatory approval of the ETF, approval is set to catalyze the crypto market. We might witness a breakthrough where traditional investors in the United States might have a chance to participate in trading Bitcoin without directly owning it.
Although the SEC has never approved Spot Bitcoin ETFs, the involvement of various traditional financial institutions like Blackrock, Goldman Sachs, and JPMorgan shows acceptance of these digital assets. Besides, it shows the evolving and mature market for cryptocurrencies. Additionally, spot Bitcoin ETFs are exchanged on established stock exchanges; therefore, they will bring robust liquidity to the Bitcoin market. This will make it easier for institutional investors to enter and exit the market without serious price volatility.