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Goldman Sachs Could Take Vital Role in BlackRock, Grayscale Spot Bitcoin ETFs: Report – Unchained

The banking giant is reportedly considering an authorized participant role for spot bitcoin ETFs, which many expect to receive SEC approval this month.

Posted January 3, 2024 at 4:47 pm EST.

Banking giant Goldman Sachs is poised to become a crucial player in the launch of bitcoin exchange-traded funds (ETFs) proposed by BlackRock and Grayscale in the U.S., according to a CoinDesk report, citing sources familiar with the matter. 

The bank is in discussions to serve as an authorized participant (AP), a key role in the ETF industry that involves creating and redeeming shares to ensure that the value of an ETF aligns with its underlying assets. The continued moves into the bitcoin ETF space by major U.S. banks reflects the growing mainstream acceptance of cryptocurrencies. 

Spot bitcoin ETFs have gained widespread interest because the investment products would provide investors a way to gain exposure to bitcoin (BTC) without directly owning the cryptocurrency. The ETFs will be traded on traditional securities exchanges like the New York Stock Exchange once they receive approval from the U.S. Securities and Exchange Commission (SEC). 

Investors are expecting approvals to happen soon, as reflected in the BTC price crossing the $45,000 line this week. The optimism grew even stronger after a recent slate of amended filings showed that the issuers are willing to embrace cash creation, an SEC-preferred redemption model that means funds will have to convert BTC to cash before returning it to investors. 

Goldman Sach is aiming to partner with BlackRock, the world’s largest asset manager, and Grayscale, which is seeking to convert its $26 billion Grayscale Bitcoin Trust into a spot ETF. The involvement would place Goldman Sachs alongside other financial giants such as JPMorgan Chase, Jane Street, and Cantor Fitzgerald, who will be taking on the AP role for various companies.

Read more: How Will a Spot Bitcoin ETF in the U.S. Affect the Rest of the World?

The potential of introducing crypto to so-called Main Street investors through ETFs has encouraged some of the biggest names on Wall Street to make the leap. These include BlackRock and Franklin Templeton along with Invesco and Galaxy Digital. All told, the SEC is currently deliberating on 14 different Bitcoin ETF applications, including ones from ARK Investment/21Shares, Grayscale, Bitwise, Valkyrie Funds and Van Eck.

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