Grayscale’s Bitcoin ETF Application Raises Eyebrows Amid Missing Participant Details

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Cryptocurrency asset manager Grayscale has stirred speculation after an amended filing for a Bitcoin exchange-traded fund (ETF) excluded crucial details about its authorized participants, raising concerns among industry analysts.

According to recent reports, Eric Balchunas, Bloomberg’s senior ETF analyst, highlighted the amended filing, emphasizing Grayscale’s clarification that its proposed ETF would only transact in cash for shares. However, Grayscale left the names of its authorized participants conspicuously blank in the documentation submitted to the United States Securities and Exchange Commission (SEC).

Balchunas expressed puzzlement over this omission, particularly since the SEC typically requires these participant details, stating, “Not sure why since SEC wants to see it and they have been pretty cocksure about having one.”

In contrast, competitors in the race for a U.S. Bitcoin ETF—Fidelity, WisdomTree, and Invesco Galaxy—detailed their authorized participants in their recent filings. Invesco Galaxy named Virtu and JPMorgan, while WisdomTree and Fidelity listed Jane Street Capital.

Authorized participants play a crucial role in ETFs, being financial entities empowered to create and redeem shares.

Grayscale previously indicated plans to enlist Jane Street and Virtu Financial as authorized participants to transition its Grayscale Bitcoin Trust into an ETF, raising further queries as to why these details were omitted.

Balchunas expressed skepticism about Grayscale’s claims, pointing out that despite their affirmations via social media, the crucial information remained absent in the official documentation required by the SEC.

The amended filing arrived on Dec. 27, coinciding with Barry Silbert’s resignation from Grayscale’s board of directors, adding intrigue to the situation.

The looming deadline for the SEC’s decision on Bitcoin ETF applications, scheduled for Jan. 10, has led to speculation among industry experts. Many anticipated answers to arrive by the first week of 2024, awaiting the SEC’s verdict on the aspiring ETF issuers’ filings.

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