Ahead of the possible approval of Bitcoin ETFs, US financial giant Goldman Sachs is seeking to become an authorized participant (AP) for several of the 13 management firms that want to launch this US-listed investment vehicle.
According to several sources familiar with the matter, Goldman Sachs is in talks with BlackRock and Grayscale Investments, to become an authorized participant (AP) in the Bitcoin exchange-traded funds of these companies, which are still awaiting approval from the SEC, the securities regulator in the country.
According to analysts, Goldman Sachs is likely to play a key role in Bitcoin ETFs, if they receive approval from the agency in the coming days.
To date, it is known that JPMorgan and Jane Street have been appointed by BlackRock as its authorized participants.
However, according to CoinDesk, asset management firms are likely to appoint at least five to ten institutions as APs to manage the creations and redemptions of their exchange-traded funds efficiently, due to the higher trading volumes that these financial vehicles traditionally handle.
Importance of APs in the ETF industry
Authorized participants, or APs, are key to the creation and redemption of units or shares in exchange-traded funds.
Wikieconomics defines AP as a financial institution that “has the legal or contractual right and ability to engage in specific activities, such as buying and selling securities, accessing insider information, or carrying out complex financial transactions”.
According to this definition, authorized participants of investment funds have the right to Create and redeem ETF shares, providing liquidity, balance and transparency to funds and ensuring that products are traded in line with the underlying assets.
Traditionally, large financial institutions such as JPMorgan, Jane Street, Morgan Stanley and of course Goldman Sachs are the designated APs for ETFs. This is an important role that these institutions play in keeping the ETF industry healthy.
Another company that has recently been designated as an AP for Bitcoin ETFs awaiting approval is cantor fitzgerald, according to Valkyrie Investments, for its exchange-traded fund.
Continue reading: The three cryptonarratives that sparked the most interest in 2023
