By
Mayowa Adebajo
April 30th, 2024
BlackRock is set to pump liquidity of its IBIT ETF by adding multiple Authorized Participants, with a new total of nine.
BlackRock Inc. has increased its list of Authorized Participants (APs) for its IBIT spot Bitcoin exchange-traded fund (ETF). A new filing with the United States Securities and Exchange Commission (SEC) adds five new Authorized Participants to its existing list, pushing the total to nine.
New BlackRock Authorized Participants to Help Improve IBIT Liquidity
The new APs include Citadel Securities LLC, Goldman Sachs & Co. LLC, ABN AMRO Clearing USA LLC, Citigroup Global Markets, Inc., and UBS Securities LLC. These five join existing APs like JP Morgan Securities LLC, Jane Street Capital, Virtu Americas LLC, and Macquarie Capital (USA) Inc. According to the filing, the Sponsor, iShares Delaware Trust Sponsor LLC, may add more APs anytime.
An AP is a financial institution responsible for creating and redeeming ETF shares. These entities, usually banks, are responsible for most of the ETF’s liquidity, ensuring a healthy amount by holding the ETF’s underlying assets. They use a creation and redemption mechanism that creates more shares when there is a market shortage or reduces shares in circulation where necessary.
Adding multiple APs is expected to increase liquidity for BlackRock’s ETF shares. Also, including major institutions like UBS, Citigroup, and Goldman Sachs, point to traditional interest in Bitcoin. It may also indicate a growing trust these institutions have in regulated products that allow traditional players to comfortably enter the Bitcoin or crypto sector.
BlackRock is Gaining on the Crypto Sector
BlackRock’s IBIT ETF has had a stellar performance since trading began in January. According to Blockworks’ Bitcoin ETF Tracker, IBIT’s Assets Under Management (AUM) is at $17.24 billion, with a 24-hour volume of $268 million as of writing time. IBIT’s AUM is only second to Grayscale’s GBTC, with $24.33 billion in AUM and a 24-hour volume of $90.7 million.
Despite waiving its management fee and consequently recording a daily record inflow of $119 million, VanEck’s ETF is still struggling and only has $38.2 million in AUM, and a 24-hour volume of $1.6 million. Interestingly, VanEck believes interest in a spot Ether (ETH) ETF may be larger than interest in Bitcoin’s. According to VanEck Portfolio Manager Pranav Kanade, “ETH could make more sense as an asset to more people than Bitcoin does.” Unfortunately, there are no hints about whether or not the SEC is willing to grant approval to would-be issuers of spot ETH ETFs. The Commission has repeatedly delayed deciding on multiple applications for the Ether ETF product.
BlackRock recently took its success in the Bitcoin sector further when it launched the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), its first tokenized fund on a public blockchain. Via the Ethereum Network, BlackRock is using BUIDL to enable investments in several products, including repurchase agreements and Treasury bills. The giant asset manager launched BUIDL tokens pegged 1:1 to the dollar, for stability, and also to pay investors dollar yields. Within a week of the launch, the BUIDL fund received inflows of $160 million.