From Skepticism to Collaboration: JPMorgan's Role in BlackRock's Bitcoin ET

BlackRock has selected JPMorgan Securities and Jane Street Capital as authorized participants for its spot Bitcoin ETF, marking a notable inclusion of JPMorgan despite CEO Jamie Dimon’s historical skepticism toward Bitcoin.
Analysts believe the ETF approval is increasingly likely, with January 10, 2024, anticipated as a potential decisive date for SEC approval, as highlighted by Valkyrie Investments’ similar move and an 80 basis points fee structure.

In a strategic update to its spot Bitcoin ETF application on December 29, investment giant BlackRock has named two authorized participants crucial to the share creation and redemption process: Jane Street Capital and JPMorgan Securities.

This development marks a significant step forward in the journey toward a potential spot Bitcoin ETF approval by the U.S. Securities and Exchange Commission (SEC).

JPMorgan’s Unexpected Role

In an ironic twist, JPMorgan Securities, led by CEO Jamie Dimon, known for his historically critical stance on Bitcoin, finds itself as a key player in the ETF ecosystem. Despite Dimon’s skepticism, the firm is deeply entrenched in the blockchain realm through initiatives like Onyx and JPM Coin.

Notably, JPMorgan analysts foresaw the likelihood of a spot Bitcoin ETF approval back in September, underscoring the evolving dynamics within traditional financial institutions.

Breaking! JP Morgan and Jane Street will work with Blackrock as authoritised participants on their Bitcoin ETF!

Jamie Dimon has spent years publicly bashing Bitcoin. Always remember with these Wall Street snakes, ignore what they say and watch what they do! pic.twitter.com/sb2iYP5v38
— Lark Davis (@TheCryptoLark) December 30, 2023

Jane Street Capital, a quantitative trading firm, stands alongside JPMorgan as an authorized participant in BlackRock’s ETF application. While the firm gained attention for its association with FTX and Alameda Research figures Sam Bankman-Fried and Caroline Ellison, these connections are unrelated to its current involvement in ETF applications. Founded over a decade ago, Jane Street Capital continues to operate as a stalwart force in the trading landscape.

Following BlackRock’s lead, Valkyrie Investments, with its own pending ETF application, also updated its list of authorized participants. The firm named Jane Street Capital alongside financial services heavyweight Cantor Fitzgerald.

This collective movement signals a growing alignment among major players in the industry, further reinforcing the belief in an imminent ETF approval.

Analyst Insights and Fee Structure

Bloomberg ETF analysts Eric Balchunas and James Seyffart weighed in on the latest developments. Balchunas highlighted the seeming inevitability of ETF approval, emphasizing the unlikelihood of governmental intervention at this stage.

Seyffart, on the other hand, drew attention to Valkyrie’s filing, noting an 80 basis points (bps) fee, indicating a daily sponsor’s fee based on a 0.80% annual rate applied to the Trust’s Bitcoin holdings.

Countdown to Approval

With December 29 marking the final date for asset managers to make adjustments to their spot Bitcoin ETF applications, industry experts are eyeing January 10, 2024, as a potential landmark date for SEC approval.

While the SEC is mandated to decide on Ark Invest’s application by that date, the possibility of greenlighting other funds looms large, setting the stage for a transformative period in the cryptocurrency and traditional finance intersection.