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  • L Higgins and S Pettigrove

Wall St titans back ETFs, as Bitcoin goes mainstream

BlackRock's iShares Bitcoin Trust (IBIT) has seen a surge in interest from major US banks, marking a significant shift in Wall Street's historically skeptical stance on cryptocurrency. In a recent SEC filing, BlackRock disclosed that Citadel, Goldman Sachs, UBS, and Citigroup have been named as "authorized participants" for IBIT. Authorised participants play a crucial role in maintaining the correlation between IBIT's price and that of bitcoin by creating and redeeming shares in the ETF as necessary.

While the addition of these traditional finance or "tradfi" titans underscores the growing institutional acceptance of cryptocurrency, it also raises eyebrows given their historical reservations. Goldman Sachs, for instance, has long been critical of crypto, with its executives dismissing it as an investment asset class. Sharmin Mossavar-Rahmani, CIO of the bank's wealth management unit, recently reiterated this sentiment, stating that neither she nor the bank's clients are believers in crypto.

However, despite such reservations, Goldman Sachs has established a dedicated digital assets unit, signaling a pragmatic approach to the evolving market dynamics. The bank’s move to support BlackRock's bitcoin ETF comes amidst a broader trend of institutional engagement with digital assets (see recent efforts from MasterCard and Citi).

The allure of bitcoin ETFs has proven irresistible to investors, with reportedly over USD $12 billion in net inflows recorded since their launch in January. BlackRock's ETF alone boasts assets exceeding USD $16 billion, underscoring the continuing mainstream appeal of cryptocurrencies.

The inclusion of major US banks as partners in BlackRock's bitcoin ETF signifies an important moment in the mainstreaming of cryptocurrency and bitcoin's growing legitimacy as an asset class. The newly announced Authorized Participants join a number of leading US money managers who have launched their owned Bitcoin ETFs. As the blockchain ecosystem matures, traditional financial institutions are recalibrating their strategies to embrace the emerging digital frontier.

Written by Luke Higgins and Steven Pettigrove


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