As regulatory pressure on cryptocurrencies continues, BlackRock's spot Bitcoin ETF has attracted the attention of some of the world's largest market-making firms, according to Coindesk's own sources.
Trading giants such as Jane Street, Virtu Financial, Jump Trading, and Hudson River Trading are reportedly in talks with BlackRock about providing liquidity for the anticipated Bitcoin ETF.
This information stems from a BlackRock presentation reviewed by a person familiar with the matter. All parties involved, including BlackRock, Jane Street, Virtu and Jump, declined to comment on these discussions.
Market makers play a very important role in the operation of ETFs. They are responsible for creating and repurchasing new shares of the ETF to ensure that the price of an ETF remains consistent with the value represented by the ETF's assets. This mechanism is particularly important in the volatile world of cryptocurrencies.
A prime example of this can be seen in Grayscale Investments' Grayscale Bitcoin Trust (GBTC). Over the past few years the price of GBTC has deviated significantly from the value of the Bitcoin it owns and is trading at a discounted price due to its inability to redeem its shares in exchange for Bitcoin.
The US regulatory crackdown on cryptocurrencies in 2023 has led some US companies to reduce their activities in this field. Both Jane Street and Jump were reported to have reduced crypto trading during this period. However, according to James Butterfill, director of research at CoinShares, there has been a noticeable change in the SEC's stance following the Grayscale decision.
*This is not investment advice.