Jane Street, where FTX’s Sam Bankman-Fried honed his trading skills, has emerged as the go-to broker-dealer for proposed Bitcoin-focused exchange-traded funds (ETFs). Fidelity, WisdomTree, BlackRock, and Valkyrie have all designated Jane Street Capital as their "authorized participant," responsible for managing cash flows into and out of the ETFs.
BlackRock, in its updated prospectus filed with the Securities and Exchange Commission (SEC), also listed JPMorgan Securities alongside Jane Street as potential authorized participants for its Bitcoin fund, pending regulatory approval. Valkyrie, in its filing, named Jane Street Capital and Cantor Fitzgerald & Co. for a similar role.
Authorized participants, functioning as broker-dealers for ETFs, handle the creation and redemption of shares in the fund and facilitate cash transfers to and from its administrator. While securing such agreements is typically routine, there were initial concerns in the industry about Bitcoin funds facing difficulties due to cryptocurrencies being a newer asset class, noted Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence.
While some firms didn’t specify their intended broker-dealers in their filings, ensuring these roles are filled is seen as a critical step, according to Nate Geraci, president of The ETF Store. Geraci highlighted BlackRock’s apparent completion of SEC requirements, positioning it as a frontrunner for potential inclusion in the first wave of spot Bitcoin ETF approvals.
Additionally, details on fees and pricing emerged from the prospectus updates before the SEC’s deadline. Invesco plans to waive the 0.59% fee on the first $5 billion in assets for the initial six months of its Invesco Galaxy Bitcoin ETF listing. Fidelity stands out with the lowest fee disclosed so far at 0.39%, as per Balchunas.
Bitcoin’s surge of over 150% in 2023 has fueled optimism around SEC approval for a direct Bitcoin ETF, distinct from existing products based on Bitcoin futures. The regulator faces a deadline of January 10 to decide on the spot Bitcoin ETF application from Cathie Wood’s ARK Investment Management LLC and 21Shares.
