JPMorgan the Drama King: From Bearish on Bitcoin to Teaming Up with BlackRock
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JPMorgan the Drama King: From Bearish on Bitcoin to Teaming Up with BlackRock
Invesco and BlackRock have both designated JPMorgan as the authorized participant for their Bitcoin ETFs.
Navigating Web3 tides with focused insightsBy Tyler Durden@Zerohedge
Translation: Qin Jin, TechFlow
Remember when Jamie Dimon loudly proclaimed Bitcoin a "fraud that will eventually blow up," saying he would shut it down "if he were the government," and claiming crypto's only "real use is for crime, drug dealing, money laundering, and tax evasion"?
It turns out this bank, which has already paid $40 billion in fines, penalties, and legal settlements—making it a serial corporate offender—has now decided to double down on crime according to its own definition...
Today we learn that not one, but two giant asset management firms—Invesco and BlackRock, the world’s largest asset manager and also the Federal Reserve’s own trading platform—have both designated JPMorgan Chase as their Authorized Participant (AP), meaning the intermediary through which ETF shares can first be created by converting cash into Bitcoin, and vice versa.
In addition to JPMorgan, BlackRock has also named Jane Street Capital—the firm where Sam Bankman-Fried learned everything about high-frequency trading in the Bitcoin market before becoming the greatest crypto criminal in history—as a broker responsible for moving cash in and out of its spot Bitcoin ETF once approved by the SEC in January.
According to an amended prospectus filed with the U.S. Securities and Exchange Commission (SEC) late Friday, JPMorgan will serve as the Authorized Participant for both BlackRock’s iShares Bitcoin Trust and Invesco’s Galaxy Bitcoin ETF. As such, it will handle the creation and redemption of ETF baskets and transfer cash between fund managers.
Or, as we might say…
Aside from BlackRock, other Wall Street ETF heavyweights including Invesco, Franklin Templeton, and Fidelity have also filed applications for spot Bitcoin ETFs. Grayscale Investments has applied to convert its Grayscale Bitcoin Trust into an ETF. All these applications are expected to be approved in the coming weeks.
Incidentally, this outcome was likely due to JPMorgan’s insistence that the SEC require Bitcoin ETFs to adopt a cash-based creation/redemption mechanism rather than physical delivery. According to Bloomberg journalist Eric Balchunas, the SEC favors the cash model for spot Bitcoin ETFs precisely to minimize the number of intermediaries involved in handling actual Bitcoin during issuance and redemption.
They don’t like brokers acting as intermediaries handling Bitcoin, Balchunas noted. Many firms reportedly planned to create unregistered subsidiaries to bypass using actual broker-dealers, but the SEC does not want that.
The SEC wants things to be “more closed-loop,” said Balchunas, adding that regulators have expressed concerns over money laundering risks.
“If only BlackRock and Coinbase are touching the actual Bitcoin,” he said, “you have more control over who holds it. They just want a more closed system with fewer intermediaries touching real Bitcoin.”
Of course, if JPMorgan—a bank fined $40 billion over the past 15 years—ends up facilitating money laundering, that seems perfectly acceptable.
While JPMorgan has so far been named AP for only two of these ETFs, Jane Street Capital appears to be the AP for nearly all of them, meaning it will front-run virtually every ETF order in the years ahead. Had Sam Bankman-Fried stayed at Jane Street, he could have become a trillionaire—and completely legally.
As for the clueless farmer below, who just weeks ago gleefully declared that even bank CEOs were siding with her in her foolish anti-crypto crusade…
The joke’s on Pocahontas…
TechFlow Note: *Pocahontas* is an animated film produced and released by Walt Disney in 1995, first premiering on June 16, 1995. Pocahontas’ real name was Matoaka; “Pocahontas” was actually her nickname, meaning playful or mischievous.
Meanwhile, Reuters reports that by late Friday afternoon, BlackRock, VanEck, Valkyrie Investments, Bitwise Investment Advisers, Invesco Ltd., Wells Fargo Asset Management, Fidelity, WisdomTree Investments, and the joint venture between Ark Invest and 21Shares had all submitted new filings to regulators detailing their arrangements with market makers to ensure liquidity and trading efficiency.
Sources familiar with the filing process said issuers completing submissions before the year-end revision deadline may launch the Ark/21Shares ETF by January 10, the date by which the SEC must approve or reject it.
These sources added that due to confidentiality constraints, the SEC could notify issuers as early as Tuesday or Wednesday that they are cleared to launch next week.
Bitcoin has more than doubled in price this year, hovering just below $42,000, partly driven by expectations that the SEC will soon approve spot Bitcoin ETFs.
If the regulator chooses to approve spot Bitcoin ETFs, it could inform issuers as early as next week.
Valkyrie also disclosed in its filing that it will charge a 0.80% management fee for its ETF if approved at the start of the new year. Ark and 21Shares previously indicated they plan to charge the same rate.
Fidelity Wise Origin Bitcoin Fund is expected to be the cheapest option, charging just 0.39%.
Invesco announced plans to charge 0.59%, but added in its filing that it would waive fees for the first six months on the first $5 billion in assets attracted by the new fund.
Currently, 14 asset management firms are seeking final SEC approval for spot Bitcoin ETFs. Over the past decade, U.S. securities regulators have repeatedly rejected such products over concerns about market manipulation and the inability of potential issuers to adequately protect investors. To date, the only crypto ETFs approved have been linked to Bitcoin and Ethereum futures contracts traded on the Chicago Mercantile Exchange.
Grayscale Investments and Hashdex both aim to convert their existing products into spot Bitcoin ETFs and filed updated paperwork earlier this month.
The SEC did not immediately respond to requests for comment.
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