Grayscale Investments, a leading crypto asset manager, is in talks with JPMorgan and Goldman Sachs about their possible involvement in its planned spot Bitcoin exchange-traded fund (ETF), according to a Bloomberg report on Jan 4th.
Grayscale filed an amended S-3 application with the United States Securities and Exchange Commission (SEC) on Dec. 27, 2023, to convert its flagship product, the Grayscale Bitcoin Trust (GBTC), into a spot Bitcoin ETF. GBTC is currently the largest crypto investment vehicle in the world, with over $27.76 billion in assets under management as of Jan. 4, 2024.
A spot Bitcoin ETF would allow investors to buy and sell shares that directly track the price of Bitcoin without the need for intermediaries or custodians. This would provide more transparency, liquidity, and efficiency to the crypto market, as well as lower fees and risks for investors.
However, to launch a spot Bitcoin ETF, Grayscale needs to secure the approval of the SEC, which has so far rejected all such proposals. One of the main requirements for a successful ETF application is to have authorized participants or financial firms that can create and redeem fund shares in exchange for Bitcoin.
Authorized participants play a vital role in ensuring that the ETF’s share price closely matches the underlying asset’s price by arbitraging any discrepancies and providing liquidity to the market. They also help distribute the exchange-traded fund shares to other brokers and dealers.
Grayscale Eyes JPMorgan And Goldman Sachs For Bitcoin ETF
According to Bloomberg, Grayscale has held discussions with both JPMorgan and Goldman Sachs for the role of authorized participant in its spot Bitcoin ETF, citing people familiar with the matter. The report also claims that Grayscale has approached other firms but did not name them.
JPMorgan and Goldman Sachs are two of the most prominent and influential investment banks in the world, with a combined market capitalization of over $600 billion. They have also shown increasing interest and involvement in the crypto space, offering various products and services to their clients.
JPMorgan has already been named as an authorized participant for several other spot Bitcoin ETFs pending approval by the SEC, including those proposed by Valkyrie Investments, VanEck, and WisdomTree. On the other hand, Goldman Sachs has not yet taken on such a role but has reportedly been in talks with BlackRock to act as an authorized participant for its spot Bitcoin ETF.
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