In a significant development, BlackRock, the asset management giant, has revealed the entities it intends to work with as authorized participants (APs) for its proposed spot bitcoin ETF. According to a filing on Friday, BlackRock has identified JPMorgan Securities and Jane Street as its chosen APs, pending approval from the Securities and Exchange Commission (SEC).

Authorized participants are crucial in the creation and redemption of shares for an ETF. They have the ability to exchange the ETF shares for a corresponding basket of securities or cash, reflecting the ETF's holdings. The announcement of the selected APs is viewed as an important step towards the SEC's decision on the ETF.

Industry experts, including Bloomberg Intelligence analysts James Seyffart and Eric Balchunas, have been closely following the selection of APs in new filings. Balchunas recently stated in a research note that the SEC appears ready to approve bitcoin ETF proposals that commit to cash-only creations and redemptions, and have signed agreements with authorized participants.

Balchunas and Seyffart believe there is a high probability, around 90%, that the SEC will permit certain firms to launch spot bitcoin ETFs in early January. The regulatory agency has a deadline of January 10th to make a decision on proposals from Ark Invest and 21Shares. Similar plans from other firms may also be ruled upon by that date.

As for other firms in the ETF space, Ark Invest, 21Shares, and VanEck have recently filed their S-1s, but have not yet disclosed their authorized participants. It is important to note that firms are not required to name APs until they file the effective prospectus.

In a related development, Grayscale Investments had previously confirmed plans to work with authorized participants Jane Street and Virtu Financial should its Grayscale Bitcoin Trust (GBTC) be allowed to convert to an ETF. However, the latest S-3 filing does not mention these companies as authorized participants, and a representative from Grayscale did not provide further comment.

The announcement by BlackRock regarding its intended authorized participants brings greater transparency and clarity to their proposed spot bitcoin ETF. It marks another important milestone in the ETF approval process and sets the stage for potential launches in the early months of 2023, pending SEC approval.