First-week Breakthrough of Ten Billion, Uncovering the Big Winners Behind Bitcoin ETF
TechFlow Selected TechFlow Selected
First-week Breakthrough of Ten Billion, Uncovering the Big Winners Behind Bitcoin ETF
11 Bitcoin spot ETFs, over 70 institutions involved, top Wall Street capital entering the market.
Navigating Web3 tides with focused insightsAuthor: Peng SUN, Foresight News
On January 17, Yahoo data showed that just one week after the U.S. Securities and Exchange Commission (SEC) officially approved spot Bitcoin ETFs, their cumulative trading volume had surpassed $10 billion. GrayScale, BlackRock, and Fidelity dominated this market, accounting for approximately 90% of total trading volume. Bloomberg analyst Eric Balchunas also noted that Grayscale’s spot Bitcoin ETF has seen outflows of $500 million, while BlackRock is most likely to surpass Grayscale as the "liquidity king."
Given such massive trading volumes in spot Bitcoin ETFs, beyond the 11 issuers and their affiliates, which lesser-known institutions are benefiting? Inspired by Diana Biggs, partner at 1kx, from her article "Before the Launch of Spot Bitcoin ETFs: A Deep Dive into the Status and Potential of Crypto ETPs," this author comprehensively analyzed the latest filings submitted to the SEC for 11 spot Bitcoin ETFs, uncovering at least 24 entities linked to ETF issuers and another 48 other stakeholders. In total, 72 beneficiaries have emerged, including top Wall Street capital players such as BNY Mellon, State Street, U.S. Bancorp, JPMorgan Chase, Jane Street Capital, Macquarie Capital, and Virtu.
Image Source:1kx
Custodians & Brokers & Lenders & Connected Trading Venues & Execution Agents
Coinbase
Coinbase is the largest cryptocurrency exchange in the United States and won its lawsuit against the U.S. Securities and Exchange Commission (SEC).
Currently, Coinbase serves as the Bitcoin custodian for eight institutional ETFs—ARK 21Shares, Bitwise, Grayscale, WisdomTree, Invesco/Galaxy, BlackRock, Franklin Templeton, and Valkyrie. Simultaneously, Coinbase also acts as the primary broker, credit lender, connected trading venue, or main execution agent for these eight ETFs.
Additionally, most ETFs' connected trading venues include Bitstamp, LMAX, Kraken, and four non-bank market makers whose names cannot be disclosed due to confidentiality restrictions.
Gemini Trust Company, LLC
Gemini Trust Company, LLC is the Bitcoin custodian for VanEck's ETF.
Gemini Trust Company is a cryptocurrency exchange under Tyler Winklevoss. In 2022 and 2023, Genesis, a crypto trading firm, filed for bankruptcy following the collapse of FTX, leading Gemini into debt disputes and legal battles with Genesis and its parent company DCG, and facing investigations and lawsuits from the U.S. government. On December 13, 2023, Gemini Trust sent an email to creditors outlining a proposed restructuring plan, which has since been submitted for voting.
On the other hand, in April 2023, Gemini launched a non-U.S. cryptocurrency derivatives platform called Gemini Foundation. On January 17, 2024, Gemini received approval from France’s financial regulator Autorite des marches financiers (AMF) to launch operations in France and stated it would roll out its products to retail and institutional clients in France within the coming weeks.
Listed Exchanges
Chicago Board Options Exchange (Cboe BZX Exchange)
Of the 11 spot Bitcoin ETFs, six—ARK 21Shares, WisdomTree, Invesco/Galaxy, VanEck, Fidelity, and Franklin Templeton—chose to list on the Chicago Board Options Exchange.
The parent company of Cboe BZX Exchange is Cboe Global Markets (formerly CBOE Holdings, Inc.). Cboe is the world's largest options exchange and has recently supported cryptocurrency and digital asset businesses, launching regulated cryptocurrency exchanges and note exchanges through Cboe Digital. Before the SEC approved Bitcoin ETF listings, Cboe Australia and Cboe Europe already offered spot Bitcoin and Ethereum ETF products. On January 12 this year, Cboe Digital launched margin futures for Bitcoin and Ethereum.
New York Stock Exchange (NYSE Arca, Inc)
Bitwise, Grayscale, and Hashdex chose to list their ETFs on NYSE Arca, Inc., part of the New York Stock Exchange.
NYSE Arca, Inc. is a fully electronic securities exchange under the NYSE, formerly known as Archipelago Exchange, founded in November 1994 in Chicago and merged into the NYSE in 2006. It is a top-tier exchange for ETF listing and trading in the U.S., handling over 8,000 securities listed in the United States. The NYSE itself was established in 1792 and is now the world's largest securities exchange.
Previously, Bitcoin and Ethereum futures ETFs were already listed on NYSE Arca, Inc. The NYSE has also applied for trademarks focused on virtual commodities and NFTs, including an “online marketplace” for NFTs and virtual goods.
Nasdaq (NASDAQ)
BlackRock and Valkyrie chose to list their ETFs on Nasdaq.
Nasdaq is a U.S.-based electronic stock exchange, founded in 1971, currently the second-largest securities exchange globally, trailing only the NYSE.
In July 2023, Nasdaq canceled plans to launch a cryptocurrency custody service but partnered with Hashdex in September to file for a spot Ethereum ETF, “Hashdex Nasdaq Ethereum ETF.” Additionally, Nasdaq Ventures’ investment portfolio includes blockchain and digital assets.
Robinhood
On January 12, 2024, Robinhood announced that all 11 spot Bitcoin ETFs were available for trading via Robinhood Financial for retirement and brokerage accounts across the U.S.
Robinhood is a U.S.-based stock and cryptocurrency trading platform offering completely free online services. The company has received substantial investments multiple times from top-tier VCs like Sequoia Capital, a16z, and Ribbit Capital.
Robinhood has now launched a cryptocurrency wallet, Robinhood Wallet, and its subsidiary Robinhood Crypto launched in Nevada last October.
Managers & Transfer Agents & Cash Custodians & Fund Accountants & Registrars
Bank of New York Mellon
The Bank of New York Mellon was formed in 2007 by the merger of The Bank of New York and Mellon Financial, primarily engaged in securities services and asset management.
BNY Mellon has long participated in cryptocurrency and digital asset businesses, receiving approval from New York regulators to offer cryptocurrency custody services. It operates a dedicated digital asset division and has invested in blockchain projects, focusing on compliant digital currencies, tokenized securities, and blockchain payments. Caroline Butler, global head of digital assets at BNY Mellon, also co-chairs the CFTC’s Global Digital Asset Markets Subcommittee.
In these spot Bitcoin ETFs, BNY Mellon serves as manager, transfer agent, and cash custodian for ARK 21Shares, Bitwise, Grayscale, Invesco/Galaxy, BlackRock, and Franklin Templeton. Additionally, BNY Mellon is an authorized participant for Hashdex, enabling share purchases.
State Street
State Street Bank and Trust Company, commonly referred to as State Street Global Services, is a subsidiary of State Street Corporation (founded in 1792, the second-oldest surviving bank in the U.S.), headquartered in Massachusetts. It specializes in serving mutual funds and their advisors, collective investment funds, corporate and public pension funds, insurance companies, operating corporations, and nonprofit organizations. As of June 30, 2018, State Street surpassed BNY Mellon to become the world’s largest custodial bank.
In the crypto space, State Street has consistently worked on “multi-faceted solutions for tokenized securities and native tokens,” maintaining an independent digital asset business. It previously partnered with crypto custodian Copper to launch cryptocurrency custody services and served as manager for crypto asset manager Iconic Holding.
State Street’s involvement in WisdomTree, VanEck, and Fidelity’s spot Bitcoin ETFs is shown in the table below:
U.S. Bancorp
U.S. Bancorp is a U.S. bank holding company founded in 1891, now the fifth-largest bank in the United States, with over 3,000 branches and more than $20 billion in assets. Ranked 117th on the Fortune 500, it has been designated a systemically important financial institution by the U.S. Financial Stability Oversight Council.
U.S. Bancorp is one of the few banks offering blockchain-based 24/7/365 digital payment solutions and launched its cryptocurrency custody service in 2021. It previously invested in Ownera, a securities tokenization infrastructure company.
Its subsidiary U.S. Bancorp Fund Services, LLC is an investment advisory firm providing single-source solutions supporting various investment strategies and products, including mutual funds, alternative investments, and ETFs. U.S. Bancorp Fund Services, LLC is the parent of U.S. Bank National Association (U.S. Bank N.A.), and U.S. Bank Global Fund Services is a wholly-owned subsidiary of U.S. Bank N.A., offering custody, lending, fund, and banking services through U.S. Bank N.A.
The three entities—U.S. Bancorp Fund Services, LLC, U.S. Bank N.A., and U.S. Bank Global Fund Services—are involved with Valkyrie and Hashdex ETFs. U.S. Bank N.A. is the custodian for the Hashdex ETF, while U.S. Bank Global Fund Services serves as registrar, transfer agent, sub-manager, and fund accountant. For the Valkyrie ETF, U.S. Bank N.A. is the cash custodian, and U.S. Bancorp Fund Services, LLC acts as manager and transfer agent.
Trustees
Delaware Trust Company
Delaware Trust Company is a corporate trust and agency service provider responsible for safeguarding assets and representing the interests of ETP holders or investors.
Cryptocurrency ETFs must appoint a trustee to comply with Section 3807(a) of the Delaware Code, which states: “Every statutory trust shall have at any time at least one trustee who, if a natural person, shall be a resident of the United States, or in all other cases, whose principal place of business is located in the United States.”
Of the 11 spot Bitcoin ETFs, nine—including ARK 21Shares, Bitwise, Grayscale, WisdomTree, Invesco/Galaxy, VanEck, Fidelity, Franklin Templeton, and Valkyrie—have chosen Delaware Trust Company as their trustee.
Wilmington Trust
Wilmington Trust, National Association, is a provider of international corporate and institutional services, investment management, and private banking. Founded in 1903, it went public on the NYSE in 1999 and merged with M&T Bank in 2010. Data from 2016 indicated Wilmington Trust ranked among the top ten U.S. institutions by trust assets.
Wilmington Trust tested blockchain technology in 2020 for processing mortgage-backed loan data. Currently, it serves as trustee for iShares in Delaware and for Hashdex.
Index Providers
CF Benchmarks
CF Benchmarks is the world’s first cryptocurrency index provider launched by Kraken, authorized and regulated by the UK’s FCA. CF Benchmarks has collaborated with CME Group to launch multiple cryptocurrency reference rates (in USD) and real-time indices.
Currently, CF Benchmarks serves as the index provider for six spot Bitcoin ETFs: ARK 21Shares, Bitwise, WisdomTree, BlackRock, Franklin Templeton, and Valkyrie.
CoinDesk Indices
CoinDesk Indices is a digital asset index provider offering crypto indices, Digital Asset Classification Standard (DACS), and news alerts.
CoinDesk Indices is the index provider for Grayscale’s spot Bitcoin ETF.
Lukka, Inc.
Lukka is the index provider for Invesco/Galaxy’s spot Bitcoin ETF.
Founded in 2014, Lukka is a crypto asset software and data provider compiling data on over 14,000 crypto spot assets, 70,000 crypto derivatives, 300 exchanges, and around 30 decentralized exchanges. It serves both traditional finance firms and crypto companies, including Arca, Circle, CPA.com, eToro, IHS Markit, S&P Dow Jones Indices, and State Street.
In January 2022, Lukka completed a $110 million Series E funding round, valuing the company at over $1.3 billion, led by hedge fund Marshall Wace, with participation from Miami International Holdings, Summer Capital, SiriusPoint, Soros Fund Management, Liberty City Ventures, S&P Global, and CPA.com, which also invested in Lukka’s previous Series D round.
Coin Metrics
Coin Metrics is a crypto data company founded in 2017, operating as an open-source project providing network data, market data, indices, and network risk solutions for crypto institutions.
In April 2022, Coin Metrics raised $35 million in a Series C round led by Acrew Capital and BNY Mellon, with participation from Cboe Global Markets, Brevan Howard Digital, Goldman Sachs, and Fidelity Investments. In October 2023, Coin Metrics secured approximately $6.73 million in financing involving equity, options, and other securities.
Coin Metrics serves as the calculation agent for Fidelity’s spot Bitcoin ETF, “Fidelity Wise Origin Bitcoin Fund.”
Authorized Participants
Jane Street Capital
Jane Street Capital is an authorized participant for 10 spot Bitcoin ETFs, including ARK 21Shares, Bitwise, Grayscale, WisdomTree, Invesco/Galaxy, BlackRock, VanEck, Fidelity, Franklin Templeton, and Valkyrie.
Jane Street Capital is a New York-headquartered investment management firm and major market maker founded around 1999. All its software is written in the OCaml programming language, and its parent entity is JSCT, LLC. In 2018, Jane Street traded an average of $13 billion daily in global equities, handling 7% of global ETF trading volume. By the end of 2020, Jane Street traded $4 trillion in global equities, $1.4 trillion in bonds, and $3.9 trillion in ETFs. In 2021, it served as an authorized participant for 260 ETFs and lead market maker for 506 ETFs.
Jane Street Capital is deeply involved in Crypto and Web3, investing in numerous Web3 projects such as Bastion (a DeFi lending protocol on Aurora), Vertex Protocol (a foreign exchange market on Terra ecosystem), Tonic (a DEX on NEAR ecosystem), Kaleidoco (a Web3 entertainment tech company), Pragma Network (a decentralized oracle based on StarkNet), Shardeum (a Layer1 blockchain), Texture (a DeFi yield platform on Solana), Panoptic (an oracle-less perpetual options protocol based on Uniswap), Astrolab (a cross-chain yield aggregator), Vest Exchange (a perpetual contracts exchange on Arbitrum), C3 (a crypto exchange), Kaito (an AI Web3 search engine), Ambient Finance (a decentralized trading platform), ZetaChain (a Layer 1 blockchain), and Membrane Labs (a crypto trading and lending platform). During the Luna crash, Luna Foundation Guard (LFG), a nonprofit organization in the Terra ecosystem, sought over $1 billion in funding to support UST, with commitments of about $700 million from Jump Trading, Celsius, and Jane Street—though the deal ultimately failed.
Notably, Jane Street Capital previously employed SBF, his former girlfriend Caroline Ellison, Xiaoyun "Lily" Zhang, and other traders who later joined FTX (source: Protos).
Macquarie Capital USA Inc
According to the 11 ETF filings, Macquarie Capital (USA) Inc. is an authorized participant for six spot Bitcoin ETFs: ARK 21Shares, Bitwise, Grayscale, WisdomTree, BlackRock, and Fidelity.
Macquarie Capital (USA) Inc. is an investment management firm offering advisory, capital and asset management, research, trading, and hedging services globally. Macquarie Group is an Australian financial services giant.
In August 2021, Macquarie Group CEO Shemara Wikramanayake stated the bank was ready to adopt the latest blockchain technologies once regulators approve them. In September, Macquarie Group partnered with Blockstream, a Bitcoin infrastructure company, to pilot renewable energy-powered mining facilities. In July 2023, Esme Pau, head of digital transformation research at Macquarie Capital (USA) Inc., said the focus in crypto lies on AI + blockchain, increasing institutional adoption of digital assets, tokenization, and CBDCs.
Virtu Americas LLC
Virtu Americas LLC is an authorized participant for 10 spot Bitcoin ETFs: ARK 21Shares, Bitwise, Grayscale, WisdomTree, Invesco/Galaxy, BlackRock, VanEck, Fidelity, Franklin Templeton, and Hashdex.
Virtu Americas LLC is an institutional brokerage firm providing clearing and settlement, direct market access trading, electronic access, and trade execution services globally. Its parent company is Virtu Financial Inc., a U.S. financial services firm offering trading products and market-making services founded by Vincent Viola, former chairman of the NYMEX under CME Group, and publicly listed on Nasdaq in 2015.
Virtu Financial has also entered the crypto industry, establishing a dedicated crypto trading team. It has partnered with FairX, a derivatives exchange regulated by the U.S. Commodity Futures Trading Commission (CFTC), and co-founded the cryptocurrency exchange EDX Markets with financial giants Charles Schwab, Citadel Securities, Fidelity Digital Asset, Paradigm, and Sequoia Capital.
Cantor Fitzgerald & Co.
Cantor Fitzgerald & Co. is an authorized participant for the spot Bitcoin ETFs issued by Valkyrie and Hashdex.
Cantor Fitzgerald & Co. is a U.S. financial services company founded in 1945, specializing in institutional equities, fixed income sales and trading, and serving the middle market through investment banking, prime brokerage, and commercial real estate financing, while offering advisory and asset management, gaming technology, and e-commerce services. Cantor has over 5,000 institutional clients and is one of 25 primary dealers authorized to trade U.S. government bonds with the Federal Reserve Bank of New York, allowing direct transactions with the Fed.
* Side note: A defining hardship in Cantor’s history is the terrorist attack on September 11, 2001, when its headquarters and offices in Lower Manhattan’s World Trade Center were destroyed.
Regarding crypto, Cantor Fitzgerald is deeply involved. In February 2023, insiders revealed that Cantor Fitzgerald helped Tether manage a $39 billion bond portfolio. On January 17 this year, Cantor Fitzgerald CEO Howard Lutnick confirmed it indeed manages funds for Tether.
Marex Capital Markets Inc.
Marex Capital Markets Inc. is an authorized participant for the Invesco Galaxy Bitcoin ETF. It is a global financial services platform offering market-making, execution and clearing, hedging and investment solutions, price discovery, and data and advisory services to financial market clients.
Marex has also ventured into the crypto industry—for example, acting as Goldman Sachs’ counterparty for Ethereum derivatives trading and launching structured products linked to Coinbase stock through its derivatives arm, Marex Solutions.
JP Morgan Securities LLC
JP Morgan Securities LLC is an authorized participant for four spot Bitcoin ETFs: Invesco/Galaxy, BlackRock, Fidelity, and Hashdex.
JP Morgan Securities is an investment management firm and subsidiary of JPMorgan Chase, offering wealth planning, education funding, research, securities, brokerage solutions, advisory programs, and portfolio management services globally.
JPMorgan has deep expertise in crypto, consistently supportive of blockchain technology and rejecting claims that Bitcoin is a Ponzi scheme. Its focus areas include cross-border payments, tokenization, and Ethereum technology. It has launched the blockchain-based fixed-income trading network Onyx, a virtual payment wallet “JP Morgan Wallet,” and the blockchain-based payment system JPM Coin.
ABN AMRO Bank & ABN AMRO Clearing USA LLC
ABN AMRO Bank is an authorized participant for the Hashdex ETF; ABN AMRO Clearing USA LLC is an authorized participant for the VanEck ETF.
ABN AMRO Bank is the third-largest bank in the Netherlands, headquartered in Amsterdam, directly supervised by the European Central Bank. In September 2023, ABN AMRO used Tokeny and Fireblocks’ digital wallet services to register a digital green bond on a public blockchain; in November, it cleared options trades conducted by Wintermute Asia, the derivatives trading arm of Wintermute, on CME Group.
ABN AMRO Clearing USA LLC primarily handles clearing for listed stocks, options, and futures, with its U.S. headquarters in Chicago.
Other authorized participants for Hashdex include Goldman Sachs & Co., BNP Paribas, Credit Suisse, Citadel Securities LLC, Jefferies Group LLC, Mirae Asset Financial Group, Royal Bank of Canada, UBS Group AG, Societe Generale Group, and Wells Fargo Bank, N.A.—details omitted here.
Market Makers
Cumberland DRW LLC
Cumberland DRW is a cryptocurrency market maker specializing in institutional-scale markets for Bitcoin and other cryptocurrencies, offering transaction settlement, investment management, and intraday trading services to U.S. clients. Its parent company is the large trading firm DRW Holdings. Cumberland invests heavily in blockchain projects, and its on-chain activity has become a market indicator.
Cumberland DRW has served as a counterparty for the spot Bitcoin ETFs of Invesco/Galaxy and Fidelity.
JSCT, LLC
JSCT, LLC is the parent company of Jane Street Capital, LLC. While Jane Street Capital serves as an authorized participant for 10 ETFs, JSCT, LLC also acts as a market maker/counterparty for four ETFs: Grayscale, Invesco/Galaxy, Fidelity, and Franklin Templeton.
Flow Traders
Flow Traders is a market maker/counterparty for Grayscale and Invesco/Galaxy’s spot Bitcoin ETFs.
Flow Traders is a proprietary trading firm acting as a market maker, using high-frequency and quantitative trading strategies to provide liquidity to securities markets. Originally founded in Amsterdam, Flow Traders maintains offices in New York, London, Milan, Paris, Cluj, Shanghai, Singapore, Chicago, and Hong Kong. It is one of the largest ETP market makers globally, providing liquidity for over 13,000 ETPs listed in North America, Europe, and Asia-Pacific. As of 2020, Flow Traders was the largest ETF market maker in Europe.
In 2019, Flow Traders announced it began trading cryptocurrencies and invested in multiple Web3 projects such as Tonic, Ondo Finance, Elwood Technologies, Thalex, Pragma Network, Sei Labs
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
Foresight News
