Jane Street is broker of choice for bitcoin-ETF issuers

Fidelity, WisdomTree, BlackRock and Valkyrie are among the fund companies designating the firm as 'authorized participant' for their bitcoin ETFs.

Jane Street, the firm where FTX’s Sam Bankman-Fried learned how to trade, is so far the broker-dealer of choice for issuers of proposed exchange-traded funds that aim to invest directly in bitcoin.

Fidelity and WisdomTree named Jane Street Capital as their “authorized participant,” the industry’s term for the firm that’s responsible for steering cash into and out of ETFs. BlackRock also named Jane Street, as well as JPMorgan Securities, as its authorized participants should its proposed spot-bitcoin fund receive regulatory approval, according to an amended prospectus filed with the Securities and Exchange Commission last Friday. Valkyrie said in its own filing that it has engaged Jane Street Capital along with Cantor Fitzgerald & Co. for the same role.

Broker-dealers serving as authorized participants for ETFs are responsible for handling the creation and redemption of baskets of shares in the fund as well as transfers of cash to and from its administrator. While it’s usually not hard for ETF issuers to get authorized-participant agreements, some industry watchers had expressed concerns that bitcoin funds would have a harder time since cryptocurrencies are a newer asset class, according to Eric Balchunas, senior ETF analyst at Bloomberg Intelligence.

Not every firm filing an amended prospectus last Friday listed its intended broker-dealer for the role.

“Lining up APs won’t exactly be a layup for every prospective issuer, so this was an important step,” said Nate Geraci, president of The ETF Store. “Based on everything we know at this point, BlackRock is the first issuer to complete the SEC’s requirements in order to be considered for inclusion in the first wave of spot-bitcoin ETF approvals.”

FEES AND PRICING

Among other highlights from the amended prospectuses filed before the SEC’s deadline last Friday, Invesco said that for the first six months its Invesco Galaxy Bitcoin ETF is listed, it intends to waive the 0.59% fee on the first $5 billion of assets. Fidelity’s filing lists its fee as 0.39%, which is the lowest so far, according to Balchunas.

Bitcoin has rallied more than 150% in 2023 amid optimism that the SEC will finally approve an ETF that invests directly in the oldest and largest cryptocurrency, as opposed to existing products that are based on bitcoin futures.

The SEC faces a Jan. 10 deadline to decide whether to approve a spot bitcoin ETF application filed by Cathie Wood’s ARK Investment Management and 21Shares.

[More: Cathie Wood predicts SEC will approve multiple bitcoin ETFs at once]