The new additions demonstrate that corporations are now interested in getting in on the action.
An amendment to BlackRock’s S-1 registration statement with the U.S SEC was filed.
On April 5, prominent global asset manager BlackRock added five major Wall Street companies as additional permitted participants to its Bitcoin exchange-traded fund (ETF) prospectus.
An amendment to BlackRock’s S-1 registration statement with the U.S SEC states that new members include ABN AMRO Clearing, Citadel Securities, Citigroup Global Markets, Goldman Sachs, and UBS Securities.
Virtu Americas, Macquarie Capital, Jane Street Capital, and JPMorgan Securities are among the previously permitted participants in the ETF.
Cash Mechanism and Redemption Structure
Moreover, an essential aspect of the BTC ETF’s operating mechanism is the ability for authorized participants to generate and redeem ETF shares. Also, this may be done by trading ETF shares for cash or a basket of assets reflecting the ETF’s holdings. According to Bloomberg analyst Eric Balchunas, the new additions demonstrate that major corporations are now interested in getting in on the action and/or are comfortable with being publicly linked to this.
Furthermore, the main goal of the SEC’s stance on a Bitcoin ETF cash creation and redemption structure was to reduce the dangers of market manipulation in transactions. In contrast to the conventional in-kind paradigm, where market participants directly deal with the underlying assets, the cash mechanism states that new Bitcoin ETF shares may only be issued or redeemed via cash transactions.
Initial suggestions from asset managers like Hashdex suggested this method to avoid intraday price manipulation. Major fund managers such as BlackRock, ARK Invest, and Grayscale have also included this method in their filings after receiving instructions from the SEC.