Fidelity Picks Jane Street, Cumberland to Trade Bitcoin for Potential ETF

Yueqi Yang, Bloomberg News

A neon sign indicates that Bitcoin is accepted inside the venue of the Paralelni Polis project, an organization combining art, social sciences and modern technology, in Prague, Czech Republic, on Friday, Jan. 5, 2024. Bitcoin has been on a tear ahead of an upcoming Jan. 10 deadline that could see the US Securities and Exchange Commission approve the first exchange-traded fund tied directly to the asset’s spot price. Photographer: Milan Jaros/Bloomberg , Bloomberg

(Bloomberg) -- Fidelity Investments has chosen Jane Street and Cumberland DRW to buy and sell Bitcoin for its spot Bitcoin exchange-traded fund, if and when the ETF is approved by regulators.

The Boston-based asset manager has entered into agreements with the firms to act as third-party Bitcoin trading counterparties, according to a filing submitted to the US Securities and Exchange Commission Monday. The arrangement differs from that of other Bitcoin ETF applicants such as BlackRock Inc. and Franklin Templeton, both of which picked Coinbase Global Inc. to trade and custody Bitcoin. Fidelity is using unit Fidelity Digital Asset Services as Bitcoin custodian for its ETF.

A number of prospective Bitcoin ETF issuers filed amendments on Monday in a final push before the SEC is set to make a decision on at least one of their applications. Bitcoin rose above $47,000 for the first time since April 2022 amid optimism that an approval could be imminent.

Read More: Bitcoin-ETF Issuers Clear Major Hurdle on Path to SEC Approval

Jane Street, the firm where FTX’s Sam Bankman-Fried learned how to trade, will also act as one of Fidelity’s authorized participants — broker-dealers responsible for steering cash into and out of ETFs to create and redeem shares. Cumberland DRW, a major crypto trading firm, is the digital-assets unit of Chicago-based trading house DRW, founded by Don Wilson.

Fidelity didn’t immediately respond to requests seeking comment, while Jane Street declined to comment.

Rob Strebel, a representative for Cumberland DRW, said the firm has the balance sheet capacity necessary to ensure Fidelity can source the liquidity needed to meet market demand for the ETF.

Other authorized participants include JPMorgan Securities, Macquarie Capital, and Virtu Americas, according to the filing.

Fidelity has been active in the crypto space, allowing retail users to buy and sell Bitcoin and Ether. It originally sought approval for the Wise Origin Bitcoin Trust in 2021, which was denied by the SEC in January 2022. It’s also one of the backers of a new crypto exchange — EDX Markets — which went live last year.