Grayscale Investments in Talks with JPMorgan and Goldman Sachs for Spot Bitcoin ETF Role

Grayscale Investments in Talks with JPMorgan and Goldman Sachs for Spot Bitcoin ETF Role

Crypto News – Grayscale Investments, a prominent player in the cryptocurrency asset management sector, is reportedly engaging in discussions with major financial institutions, including JPMorgan and Goldman Sachs. The dialogue centers around the potential involvement of these firms as authorized participants in Grayscale’s proposed spot Bitcoin exchange-traded fund (ETF).

On January 4, Bloomberg released a report, based on information from informed sources, that Grayscale has been in negotiations with these investment banks. This development emerged shortly after Grayscale’s submission of a revised S-3 application to the United States Securities and Exchange Commission, which notably did not mention any authorized participants.

In related news, Goldman Sachs is also said to be in talks with BlackRock, according to an earlier media report, regarding a similar role in BlackRock’s ETF. BlackRock has already updated its S-1 filing to include Jane Street and JPMorgan as authorized participants for its proposed ETF.

The role of an authorized participant is critical in the ETF landscape. These entities are instrumental in managing the ETF by facilitating the creation and redemption of fund shares. Notably, ETF issuers have the liberty to appoint multiple financial firms as authorized participants.

It’s important to note that ETF applicants are not obligated to name their authorized participants in their S-1 or S-3 filings, leaving room for additional financial institutions to potentially join the initiative.

JPMorgan has already secured a position as an authorized participant in several other proposed spot Bitcoin ETFs. Goldman Sachs, on the other hand, may soon join other leading Wall Street firms like Cantor Fitzgerald and Jane Street, who have previously been selected to play similar roles in different ETFs.

Goldman Sachs has maintained a cautiously neutral stance on cryptocurrencies and the digital asset sector. In a December 27 interview with Fox Business, Matthew McDermott, the head of digital assets at Goldman, expressed that the approval of a Bitcoin ETF could significantly mature the cryptocurrency market and attract more institutional investments into digital assets.

To date, the United States has not approved a spot Bitcoin ETF. However, ETF analysts have recently projected a high likelihood, approximately 90%, of such an approval occurring before January 10.

Presently, 14 asset managers are in the race to launch a spot Bitcoin ETF in the United States, aiming to offer institutional investors a direct and regulated avenue to invest in Bitcoin.