Authorized Participant

An Authorized Participant (AP) is a large broker-dealer with a contractual relationship with an ETF issuer that lets it create and redeem ETF shares directly with the fund. Retail investors and most institutions trade ETF shares on the open market through a normal broker; APs alone can mint new shares or destroy existing ones in exchange for the underlying assets (or cash, depending on the structure).

Why APs exist:

• Continuous arbitrage. When demand pushes an ETF's market price above its Net Asset Value, an AP can buy BTC, deliver it to the issuer in exchange for new shares at NAV, and sell those shares at the higher market price, keeping the spread minus execution costs. That trade closes the gap. When market price falls below NAV, APs reverse the trade: buy ETF shares at the discount, redeem them for BTC (or cash) at NAV, and sell that. Either way, the premium or discount shrinks back toward zero.
• Inventory provision. APs typically also act as market makers in the ETF shares themselves, quoting bids and offers on the exchange and providing intraday liquidity.

How a creation works mechanically:

1. AP wants to create a creation unit. Each fund sets the size, such as 40,000 shares for the iShares Bitcoin Trust and 50,000 for the Franklin Bitcoin ETF, per their annual reports filed in 2026.
2. AP delivers the required basket to the issuer. For cash creation: USD equal to NAV times unit size. For in-kind: BTC equal to the BTC backing per share times unit size.
3. Issuer credits the AP with the new shares.
4. AP sells the shares into the market (or holds them as inventory).

Redemption is the same in reverse.

Who APs are for spot Bitcoin ETFs:

Several funds name their APs in their annual reports. The iShares Bitcoin Trust's report for 2025 lists 13, including Jane Street, Virtu, JPMorgan, Goldman Sachs, Citadel Securities, BofA Securities, ABN AMRO Clearing and Macquarie. The Franklin Bitcoin ETF's six APs, as of March 31, 2026, are all on that list too.

The Bitcoin-specific wrinkle:

Under the cash-only structure the SEC approved in January 2024, the AP delivered dollars and the fund bought or sold the BTC itself through its own trading counterparties. In-kind orders, allowed since July 2025, have the AP hand over or take actual BTC, and not every AP is set up for that. The iShares Bitcoin Trust's annual report for 2025 says four of its 13 APs (Jane Street, Virtu, JPMorgan and Marex) could do in-kind orders, through affiliates.

Why this matters for a retail Bitcoin ETF buyer:

• A healthy AP list means tight spreads and tight tracking. If APs are absent or hesitant, the wrapper breaks.
• AP behavior is one reason spot Bitcoin ETFs have tracked the underlying so cleanly since launch - the arbitrage is profitable and many capable firms run it.
• AP concentration risk exists but is generally less acute than custodian concentration. The iShares Bitcoin Trust, for example, listed 13 APs in its annual report for 2025, while one custodian, Coinbase Custody, held its bitcoin.