Goldman Sachs Looking to Partner with BlackRock and Grayscale for Bitcoin ETF Role

American multinational bank Goldman Sachs is looking to assume the position of an authorized participant for BlackRock and Grayscale’s Bitcoin ETFs.

According to a CoinDesk report citing anonymous sources, the leading investment bank is currently holding discussions with the appropriate parties in a bid to become an authorized participant (AP) for the asset managers’ ETFs once they receive approval from the U.S. SEC.

This revelation comes shortly after BlackRock and other asset managers recently met with the SEC to discuss amendments to their filings, updating their fund redemption to a cash-only module. 

Grayscale also made similar amendments, pivoting to cash-only redemptions, as The Crypto Basic recently reported. However, the firm failed to disclose information on any authorized participants for its ETF. The discussions surrounding APs confirm progress in the ETF journey.

Why APs are Crucial to ETFs

Authorized participants are an integral part of the ETF scene, as they facilitate the creation and redemption of ETF shares. They are typically large financial institutions or market makers authorized by the ETF issuer, in this case, BlackRock or Grayscale. 

APs facilitate the process by exchanging a basket of underlying assets for ETF shares (creation) or ETF shares for the underlying assets (redemption). This process helps keep the ETF’s market price in line with its net asset value (NAV) and ensures liquidity in the secondary market.

Growing Institutional Interest in Bitcoin 

Goldman Sachs is not the first multinational banking giant to seek the role of an AP for the upcoming BTC ETFs.

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A few days ago, reports confirmed that BlackRock had chosen several institutions as authorized participants for its iShares BTC ETF, including JP Morgan, America’s largest bank, and Jane Street.

In addition, Valkyrie Investments, one of the investment managers looking to launch a BTC ETF, revealed in a filing last week that it had also chosen leading trading firm Jane Street as well as financial services company Cantor Fitzgerald as authorized participants.

Recall that Grayscale came out victorious last August when a U.S. appeals court declared that the SEC had no justifiable reason to deny the firm’s request to transform its GBTC fund to an ETF.

Grayscale has joined the ETF race since then, but the firm already chose Jane Street and Virtu as APs in June 2022, as it awaited approval.

The growing development marks the entrance of large institutional players in the Bitcoin market, a trend forecasted by several industry commentators. Notably, more American institutions are likely to join the list of authorized participants for the upcoming BTC ETFs.

Amid these developments, the general consensus points to an imminent approval of a spot BTC ETF by the U.S. SEC. However, a recent Matrixport report suggested that the regulatory agency could deny all ETF filings this month due to failure to meet its standards.