BlackRock Adds Five Wall Street Firms to Bitcoin ETF as Trading Volume Surges
Summary:
BlackRock added five major Wall Street companies, including ABN AMRO Clearing, Citadel Securities, Citigroup Global Markets, Goldman Sachs, and UBS Securities, as authorized contributors to its Bitcoin ETF, according to amendments made in its S-1 registration statement with the Securities and Exchange Commission (SEC). These authorized participants create and exchange ETF shares for a comparable set of securities or cash. The SEC's support for the cash mechanism in Bitcoin ETFs is intended to reduce market manipulation risk. In March, Bitcoin ETFs saw trading volumes surge to $111 billion, with BlackRock’s IBIT leading in both trading volume and managed assets.
The international investment firm, BlackRock, revised its Bitcoin exchange-traded fund (ETF) prospectus on the fifth of April, adding five leading Wall Street businesses as fresh authorized contributors. ABN AMRO Clearing, Citadel Securities, Citigroup Global Markets, Goldman Sachs, and UBS Securities were announced as the new members in the document that revised BlackRock's S-1 registration statement with the Securities and Exchange Commission. The list of existing authorized members includes renowned firms like JPMorgan Securities, Jane Street Capital, Macquarie Capital, and Virtu Americas. Crucial to the operation mechanism of the BTC ETF, authorized participants have the ability to create and exchange shares in the ETF, which entails swapping ETF shares for an equivalent set of securities that mirrors the ETF's assets or respectively swapping them for cash. Eric Balchunas, an analyst from Bloomberg, interprets these new inclusions as a sign that "highly influential firms are eager to participate and/or are now comfortable with being publicly tied to this.” The decision by SEC to support cash creation and redemption processes for Bitcoin ETFs was primarily designed to offset potential market manipulation risks involved with transactions. The cash mechanism means that only cash transactions can be used to create or redeem new shares of a Bitcoin ETF, contrasting with the traditional in-kind model where market players manage the essential assets directly. This strategy was initially proposed by asset managers like Hashdex to deter possible price manipulation during trading hours. Other asset management pioneers, including BlackRock, ARK Invest, and Grayscale, have since integrated this mechanism into their filings. During March, the Bitcoin ETFs observed a significant increase in trading volume, hitting $111 billion, though some studies suggest a decrease in product demand. BlackRock’s IBIT is currently leading in trading volume and managed assets, followed by funds from Grayscale and Fidelity. Data from Bitmex Research revealed that BlackRock’s IBIT assets had reached $17.6 billion by the first day of April.
Published At
4/5/2024 6:59:34 PM
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