Grayscale’s Cryptic Move: Bitcoin ETF Filing Raises Questions as Authorized Participants Remain Unnamed

In its recent amended application for a spot Bitcoin ETF, Grayscale has raised eyebrows by omitting details about authorized participants, the entities that can create and redeem shares of the ETF. The cryptocurrency asset manager clarified that authorized participants for its proposed ETF could only transact in cash for shares. However, unlike other companies, Grayscale left the names of its authorized participants blank in the amended filing, a move questioned by analysts.

Bloomberg senior ETF analyst Eric Balchunas highlighted the absence of this crucial information and questioned Grayscale’s decision, especially considering the SEC’s preference for transparency in this matter. In contrast, competitors like Fidelity, WisdomTree, and Invesco Galaxy explicitly listed their authorized participants in their recent filings. Invesco Galaxy, for instance, named Virtu and JPMorgan, while WisdomTree and Fidelity disclosed Jane Street Capital.

Grayscale had previously indicated its intention to enlist Jane Street and Virtu Financial as authorized participants when converting its Grayscale Bitcoin Trust into an ETF back in June 2022. The absence of this information in the recent filing has raised speculation and left industry experts puzzled about Grayscale’s strategy.

The filing, submitted as an amended S-3 document to the SEC on December 27, coincided with the resignation of Barry Silbert, the CEO of Grayscale’s parent company, Digital Currency Group, from Grayscale’s board of directors.

The SEC is set to deliver its verdict on the latest Bitcoin ETF filings by January 10, with industry insiders anticipating responses by the end of the first week of 2024. Grayscale’s decision to withhold information on authorized participants adds a layer of uncertainty to the already closely watched developments in the race for the first U.S. spot Bitcoin ETF.