BlackRock updates Bitcoin ETF, adds 5 Wall Street firms

Global asset manager BlackRock updated its Bitcoin exchange-traded fund (ETF) prospectus on April 5, adding five big Wall Street firms as new authorized participants.

New members include ABN AMRO Clearing, Citadel Securities, Citigroup Global Markets, Goldman Sachs, and UBS Securities, according to the document amending BlackRock’s S-1 registration statement with the Securities and Exchange Commission.

Among the previously authorized participants in the ETF are JPMorgan Securities, Jane Street Capital, Macquarie Capital, and Virtu Americas.

Authorized participants play a crucial role in the BTC ETF operational mechanism as they can create and redeem shares of the ETF, which involves exchanging ETF shares for a corresponding basket of securities that reflect the ETF’s holdings or exchanging them for cash.

According to Bloomberg analyst Eric Balchunas, the new additions indicate that “big time firms now want piece of action and/or are now OK being publicly associated w[ith] this.”

The SEC’s position on a cash creation and redemption mechanism for Bitcoin ETFs was primarily directed at mitigating market manipulation risks associated with transactions. The cash mechanism entails that new shares of a Bitcoin ETF will only be created or redeemed through cash transactions, in contrast to the traditional in-kind model, where market participants handle the underlying assets directly.

This approach was developed to prevent intraday price manipulation, according to initial proposals by asset managers like Hashdex. Following the SEC’s guidance, other asset managers, including giants like BlackRock, ARK Invest, and Grayscale, have incorporated this mechanism into their filings.

The Bitcoin ETFs witnessed a spike in trading volume in March, reaching $111 billion, while some analysis suggests the product’s demand is cooling down. BlackRock’s IBIT continues to dominate trading volume and assets under management, followed by Grayscale’s and Fidelity’s funds. According to data from Bitmex Research, BlackRock’s IBIT assets reached $17.6 billion on April 1.