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July 18, 2024
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Goldman Sachs considering role in Grayscale and BlackRock spot Bitcoin ETF offerings

David Solomon is CEO of Goldman Sachs. Ting Shen—Bloomberg via Getty Images

Despite being somewhat indifferent to Bitcoin previously, Goldman Sachs soon could play a key role in two of the most greatly anticipated spot Bitcoin ETFs.

The investment bank is considering serving as an “authorized participant” for likely Bitcoin ETFs offered by BlackRock and Grayscale, CoinDesk reported, citing people familiar with the matter. In the role of authorized participant, Goldman would create and redeem shares in the product to make sure the price of the ETF accurately tracks the price of its underlying assets—in this case, Bitcoin.

Wall Street banks are restricted by regulators from holding cryptocurrencies but can still participate in the flurry of spot Bitcoin ETF activity by using a cash-based system. This system, which has been adopted by Grayscale and BlackRock, is preferred by the Securities and Exchange Commission and would see authorized participants create shares for an ETF using fiat currency instead of just crypto. 

Already, other Wall Street players such as JPMorgan Chase, Jane Street, and Cantor Fitzgerald have agreed to become authorized participants for some of the 14 asset managers vying to offer a spot Bitcoin ETF, each of which could have five to 10 authorized participants via the cash-based model, according to CoinDesk.

The SEC has approved futures-based Bitcoin ETFs but not yet a spot Bitcoin ETF, which would directly track its price, saying previously it had concerns over market manipulation.

In August, an appeals court concluded that the SEC’s decision to not allow Grayscale to convert its popular Grayscale Bitcoin Trust into a spot Bitcoin ETF was “arbitrary and capricious,” clearing the way for the possible approval of such a product in the U.S. Bloomberg analysts have said it is highly probable a spot Bitcoin ETF is approved by Jan. 10.

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