Both investment banks are in talks to become authorised participants in Grayscale’s spot Bitcoin ETF; optimism of approval rebounds.
Grayscale Investments, one of the largest crypto asset managers, is currently in talks with major financial institutions JPMorgan and Goldman Sachs regarding their potential involvement in Grayscale’s proposed spot Bitcoin exchange-traded fund (ETF).
Both are being considered to be authorised participants in the ETF, Bloomberg reported, citing a person familiar with the matter.
Authorised participants (APs) are critical to the structure of ETFs. They are tasked with the creation and redemption of ETF shares, which contributes significantly to liquidity and ensures that the market price of the ETF shares closely mirrors the actual value of the underlying assets.
The news comes just days after Grayscale amended its S-3 form with no APs listed, raising concerns.
Many believe that Grayscale’s latest legal victory significantly boosted the odds that the SEC will soon approve the first US Bitcoin ETFs.
In the ruling, a court described the SEC’s rejection of Grayscale’s application to convert GBTC into a Bitcoin ETF as “arbitrary and capricious“, ordering it to review the decision.
In his appearance on CNBC’s Money Movers, SEC Chair Gary Gensler hinted at a potential shift in the SEC’s approach since Grayscale’s legal victory, commenting that the Commission is “taking a new look” at the applications.
Analysts are still 90% confident of January approval
On January 3, the price of Bitcoin tumbled 7% after Matrixport published a research note indicating that it does not expect the SEC to approve the ETFs in January.
Markus Thielen, Head of Research, wrote that all applications still fall short of a “critical requirement” that must be met before obtaining approval. He added that the Democrat-dominated SEC also has no political reason to legitimise Bitcoin as an alternative store of value.
Senior Bloomberg analysts however maintain their optimism. “We have heard nothing to indicate anything but approval,” wrote senior ETF analyst Eric Balchunas on January 3.
Last night, Balchunas pointed to further indicators of imminent approval, such as the recent SEC meetings with Nasdaq, CBOE, and NYSE to finalise comments on the 19b-4s submitted by the Bitcoin ETF issuers.
The SEC now has 14 spot Bitcoin ETF applications on its docket, including BlackRock, Ark Invest, Fidelity and others.
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