JPMorgan Chase: From shorting Bitcoin to joining hands with BlackRock

Remember when Jamie Dimon yelled that Bitcoin is “a scam that will eventually explode,” that “if he were the government, he’d shut down Bitcoin,” and that the only “real uses for cryptocurrencies are crime, drug trafficking, money laundering, and tax avoidance”?

It turns out that the bank, which has already paid $40 billion in fines, penalties, and legal damages, is a habitual criminal enterprise that has decided to double down on crime by its own definition...

Today we learned that not one, but two giant asset managers — Invesco and BlackRock, the world’s largest asset manager and the Federal Reserve’s own trading desk — have both named JPMorgan as their authorized participant, the intermediary firm through which ETFs can be first implemented by converting Bitcoin into cash and vice versa.

In addition to JPMorgan, BlackRock has also appointed Jane Street Capital - the fund firm where Sam Bankman-Fried learned everything there is to know about high-frequency trading in the Bitcoin market, becoming the greatest crypto criminal of all time - as the broker responsible for directing cash in and out of its spot Bitcoin ETF after it is approved by the U.S. Securities and Exchange Commission (SEC) in January.

According to an amended prospectus filed with the U.S. Securities and Exchange Commission late Friday, JPMorgan will become an authorized participant in both the BlackRock iShares Bitcoin Spot ETF and the Invesco Galaxy Bitcoin ETF. As such, they will be responsible for processing the creation and redemption of the ETF’s basket of shares, as well as cash transfers between fund managers.

Or, as we say....

In addition to BlackRock, Wall Street ETF giants such as Invesco, Franklin Templeton and Fidelity have also applied for spot Bitcoin ETFs, and Grayscale Investments has also applied to convert its Grayscale Bitcoin Trust Fund into an ETF. All of these applications are expected to be approved in the coming weeks.

Incidentally, this is likely due to JPMorgan’s insistence that the SEC require the Bitcoin ETF to adopt a cash creation and redemption model, rather than physical redemption. According to Bloomberg reporter Eric Balchunas, the SEC’s preference for a cash model for Bitcoin ETF spot is to minimize the number of intermediaries that come into contact with actual Bitcoin during the redemption and issuance process.

They don’t like brokers as intermediaries to get exposure to Bitcoin, Balchunas noted. The ETF analyst said: Many are looking to create unregistered subsidiaries to replace actual brokers, but the SEC doesn’t want that.

The SEC wants to “close the loop a little more,” Balchunas said, and he has also heard that regulators are concerned about money laundering.

"If it was just BlackRock and Coinbase handling the actual bitcoin, then you'd have a little more control over the bitcoin you own," he said. "They just want a more closed system with fewer intermediaries touching the actual bitcoin."

Of course, if JPMorgan Chase (which has been fined $40 billion over the past 15 years) facilitated money laundering, then all is well.

While JPMorgan has been named as the AP for two of the ETFs so far, Jane Street Capital appears to be the AP for almost all of them, meaning that in the coming years, Jane Street Capital will be doing the front-running of all ETF orders. If Sam Bankman-Fried had stayed at Jane Street Capital, he would likely have become a trillionaire, and completely legally.

As for stupid farmers like the one below, who just a few weeks ago gleefully declared that even bank CEOs were on her side in her silly anti-crypto campaign…

The joke is on Pocahontas.

Pocahontas is an animated film produced and released by Walt Disney in 1995. It was first released on June 16, 1995. Pocahontas's real name is Matoaka, and Pocahontas is actually her nickname, which means playful and naughty.

Separately, Reuters reported that as of late Friday afternoon, BlackRock Asset Management, VanEck, Valkyrie Investments, Bitwise Investment Advisers, Invesco Ltd., Wells Fargo Fund Management, Fidelity, WisdomTree Investments and a joint venture between Ark Investments and 21Shares had all submitted new documents to regulators detailing their respective arrangements with market makers to ensure trading liquidity and efficiency.

People familiar with the filing process said issuers that meet the year-end filing amendment deadline could launch the Ark/21Shares ETF by Jan. 10, the date by which the SEC must approve or disapprove the ETF.

Given the confidential nature of the discussions, the SEC could notify issuers as soon as Tuesday or Wednesday that they have approval to launch their products next week, the sources said.

Bitcoin prices have more than doubled this year to just below $42,000, fueled in part by expectations that the U.S. Securities and Exchange Commission will soon approve a spot bitcoin ETF.

If regulators choose to approve a spot bitcoin ETF, they could notify issuers as early as next week.

Valkyrie also disclosed in the filing that it would charge a 0.80% management fee on the ETFs if the SEC approves the products early in the new year. Ark and 21Shares previously disclosed they intend to charge the same fee on their ETFs.

The Fidelity Wise Origin Bitcoin Fund is expected to be the cheapest fund, with a fee of just 0.39%.

Invesco announced plans to charge a 0.59% fee but added in its filing that it would waive fees for six months on the first $5 billion in assets attracted by the new fund.

Currently, a total of 14 asset management companies hope to eventually obtain approval from the U.S. Securities and Exchange Commission (SEC) for spot Bitcoin ETFs. In the past decade, the U.S. securities regulator has repeatedly rejected the issuance of such products, citing concerns about market manipulation and the inability of potential issuers to protect investors. So far, the only approved cryptocurrency ETF is linked to Bitcoin and Ethereum futures contracts traded on the Chicago Mercantile Exchange.

Grayscale Investments and Hashdex, both of which are looking to convert existing products into spot bitcoin ETFs, submitted their own updates earlier this month.

The SEC did not immediately respond to a request for comment.