BlackRock, the world’s leading asset manager, has designated four institutional giants, including Goldman Sachs, Citi, UBS, and Citadel, as authorized participants (APs) for its spot Bitcoin exchange-traded funds (ETFs), iShares Bitcoin Trust, according to an updated prospectus filed on April 4.
More Wall Street giants want to be involved in the Bitcoin ETF market, and price expectations are through the roof.
Authorized participants (APs) are entities authorized to create and redeem ETF shares directly with the ETF issuer, such as BlackRock or Grayscale. The addition of these APs is particularly important to maintain liquidity in the ETF market and minimize the difference between the ETF’s price and its underlying value.
The SEC is Making it Happen
The filing is under review by the U.S. Securities and Exchange Commission (SEC). If approved, the fund’s APs would total nine. This list currently includes JPMorgan, ABN AMRO, Jane Street, Macquarie Capital, and Virtu.
According to Bloomberg ETF analyst Eric Balchunas, the participation of these new big players suggests the growing comfort level of institutional investors with Bitcoin. Balchunas said it’s the first time the four titans were added to the AP list.
“BlackRock updated its bitcoin ETF prospectus without many new Authorized Participants including first-timers Citadel, Goldman Sachs, UBS, Citigroup. Takeaway: big time firms now want piece of action and/or are now OK being publicly associated with this,” said Balchunas.
The latest development might not be a big surprise. In January, CoinDesk reported that Goldman Sachs had discussed being an AP for BlackRock and Grayscale’s spot Bitcoin fund. At that time, the SEC hadn’t yet approved their spot Bitcoin ETFs for trading.
Goldman Sachs is now publicly associated with the Bitcoin market through its potential role in BlackRock’s investment product. However, this move likely contradicts a recent statement from the firm’s executive.
In a recent interview with the Wall Street Journal (WSJ), Sharmin Mossavar-Rahmani, the Chief Investment Officer (CIO) of Goldman Sachs Asset Management, criticized Bitcoin, saying that the firm’s customers have no interest in the crypto asset. Mossavar-Rahmani is well-known for her loyal skepticism towards Bitcoin and cryptocurrencies.
“We do not think it is an investment asset class,” Mossavar-Rahmani told the WSJ. “We’re not believers in crypto.”
According to her, even as major competitors like BlackRock and Fidelity are increasing their positions in the cryptocurrency industry, Goldman’s clients still have no interest in products that expose them to Bitcoin. One of the reasons she thinks Bitcoin is meaningless is because it is impossible to assess its true value.
Mossavar-Rahmani even criticized the crypto industry as hypocritical and condemned cryptocurrency advocates. She said that everyone claims to democratize finance, but ultimately key decisions are controlled by a few people.
Despite a long-held skepticism toward cryptocurrencies, recent reports suggest a shift in Goldman Sachs’s stance. The financial giant has reportedly explored acquisitions or investments in struggling crypto companies.
Goldman Sachs was the first U.S. bank to offer OTC cryptocurrency trading. In 2021, they expanded their offerings with Bitcoin futures products for CME Group, allowing clients indirect exposure to crypto through ETFs.
BlackRock’s IBIT is close to surpassing Grayscale’s GBTC
Grayscale’s Bitcoin ETF, Grayscale Bitcoin Trust (GBTC), has seen massive outflows since mid-March. The outflow hit $642 million on March 18, the highest level since its debut. GBTC’s outflows remained high in the next few weeks, above $100 million. CoinGecko’s data shows that Bitcoin dipped below $67,000 during this period and further dropped below $62,000.
BlackRock’s Bitcoin ETF, IBIT, is neck-and-neck with Grayscale’s GBTC regarding Bitcoin holdings. Data from Look on Chain shows IBIT now manages over 259,381 BTC, valued at $17.3 billion. This positions IBIT to potentially overtake GBTC, which currently holds 326,859 BTC worth $21.9 billion.
BTC is currently trading at around $69,300, up 1.5% in the last 24 hours. The flagship cryptocurrency reclaimed the $70,000 mark earlier today.
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