Goldman Sachs (NYSE:GS) is seemingly in negotiations to become an “Authorized Participant” (AP) for the forthcoming spot Bitcoin exchange-traded funds (ETFs) that are being planned by BlackRock, Inc (NYSE:BLK) and Grayscale Bitcoin Trust (GBTC).
An AP in the context of ETFs plays a crucial role in the multi-trillion-dollar ETF industry. They are typically large financial institutions that have been approved to create and redeem ETF shares.
APs provide liquidity and help ensure the ETF price closely tracks its underlying assets. They do this by arbitraging any price discrepancies between the ETF shares and the underlying securities, which helps keep the ETF price in line with its Net Asset Value (NAV).
This unfolding situation involves a total of 14 asset managers, Ark/21Shares included, who are all awaiting the verdict of the U.S. Securities and Exchange Commission (SEC) on their applications for spot bitcoin ETFs, as per a CoinDesk report cited by Reuters.
The SEC is expected to disclose its decision on the Ark/21Shares ETF by January 10.
Goldman Sachs is set to follow in the footsteps of other financial behemoths by assuming the role of an AP. Recently, it was divulged that JPMorgan Chase (NYSE:JPM), Jane Street, and Cantor Fitzgerald are slated to serve as Authorized Participants for several of the approximately dozen companies looking to gain approval from the SEC to launch Bitcoin ETFs in the U.S.
The field is likely to grow with more participants, with those revealed so far being some of the largest entities in the U.S. finance sector. An insider at a significant trading firm told Coindesk that they anticipate each Bitcoin ETF to be supported by five to 10 APs.
Goldman’s AP move represents a major stride towards mainstream financial entities having a more direct interaction with the cryptocurrency sector.
Price Action
In the early trading session on Thursday, Goldman Sachs shares saw a rise of 0.32%, reaching $383.00 during premarket trading. Similarly, BlackRock shares also experienced a small uptick, increasing by 0.16% to hit $784.85.
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