BlackRock, a global asset manager, made updates to its Bitcoin exchange-traded fund (ETF) prospectus on April 5. The company added five major Wall Street firms as new authorized participants. The new members include ABN AMRO Clearing, Citadel Securities, Citigroup Global Markets, Goldman Sachs, and UBS Securities. This information was disclosed in the document that amended BlackRock’s S-1 registration statement with the Securities and Exchange Commission.
Authorized participants play a crucial role in the operational mechanism of the BTC ETF. They have the ability to create and redeem shares of the ETF. This process involves exchanging ETF shares for a corresponding basket of securities that reflect the ETF’s holdings or exchanging them for cash. Previously authorized participants in the ETF include JPMorgan Securities, Jane Street Capital, Macquarie Capital, and Virtu Americas.
According to Bloomberg analyst Eric Balchunas, the inclusion of these new firms indicates that “big time firms now want a piece of the action and/or are now okay being publicly associated with this.”
The Securities and Exchange Commission’s stance on the cash creation and redemption mechanism for Bitcoin ETFs was primarily aimed at mitigating market manipulation risks. The cash mechanism means that new shares of a Bitcoin ETF can only be created or redeemed through cash transactions, as opposed to the traditional in-kind model where market participants directly handle the underlying assets. This approach was introduced to prevent intraday price manipulation based on initial proposals by asset managers such as Hashdex. Other asset managers, including BlackRock, ARK Invest, and Grayscale, have incorporated this mechanism into their filings following the SEC’s guidance.
In March, Bitcoin ETFs experienced a surge in trading volume, reaching $111 billion. However, some analysts suggest that the demand for these products may be cooling down. BlackRock’s IBIT remains dominant in terms of 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.