BlackRock Enlists Financial Titans Citi and Goldman Sachs for Bitcoin ETF

BlackRock, the world’s largest asset manager, has enlisted four Wall Street firms as Authorized Participants, AP for its iShares Bitcoin Trust ETF. They are Citi, Goldman Sachs, UBS, and Citadel. These will be joining JP Morgan and Jane Street.

According to the amendment filed on Friday with the Securities and Exchange Commission (SEC), the six financial giants will act on behalf of the world’s largest asset manager’s spot bitcoin ETF.

Authorized Participants in the ETF Market

The role of an AP in the ETF market is crucial as it acquires underlying assets, such as Bitcoin in this case, to create shares and provide liquidity. Going forward, these financial institutions will work with ETF issuers to create and redeem shares in the primary market.

A key role of authorized participants within spot Bitcoin ETFs is to minimize the risk of these ETF shares being traded at a premium or discount relative to the true value of the underlying Bitcoin.

Is spot Bitcoin ETF Success Irresistible?

Although the exact timing of the firms’ recognition as APs remains unclear, Eric Balchunas, a senior ETF analyst at Bloomberg, in an X post seems to suggest that they may have been providing liquidity for the ETFs for several weeks before publicly disclosing their involvement.

Balchunas speculates that the firms’ decision to come forward may be due to having overcome their shyness with being associated with the ETF or just new to the space. Some other analysts say it could have been driven by the success and popularity of spot Bitcoin ETFs amidst a resurgence in Bitcoin’s price ahead of the halving event.

Wall Street Interest in Spot Bitcoin ETFs

Market watchers say the interest by institutional investors to spot bitcoin ETFs is increasing particularly due to its market performance as the trading volume of these funds reached approximately $190 billion this week from the $150 billion cumulative trading volume it achieved less than 3 weeks ago.

The involvement of more major Wall Street firms as authorized participants for BlackRock’s bitcoin ETF is a shift in the stance of traditional financial markets towards crypto. Meanwhile, BlackRock CEO Larry Fink has expressed excitement at the success of the iShares Bitcoin Trust (IBIT), dubbing it as the fastest-growing exchange-traded fund in history.