Fidelity is expected to file for a spot bitcoin exchange-traded fund (ETF), joining other major asset managers like BlackRock and WisdomTree. The filing has helped reverse negative sentiment in the cryptocurrency markets. If approved, the bitcoin ETFs could open the door for more institutional and high-net-worth retail investors to enter the crypto space. However, the Securities and Exchange Commission has rejected previous applications over concerns of market manipulation. Fidelity is also part of a consortium that recently launched a crypto exchange called EDX Markets. Grayscale Investment is suing the SEC over the rejection of its application to convert its spot Grayscale Bitcoin Trust into an ETF.
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Explore NowAsset manager Fidelity is expected to file with the U.S. securities regulator for a spot bitcoin exchange-traded fund, joining other big money managers seeking to launch bitcoin ETFs, the Block reported on Tuesday citing a source familiar with the matter.
In the past two weeks, BlackRock, WisdomTree, Invesco, VanEck, and Bitwise have filed new applications with the U.S. Securities and Exchange Commission (SEC) for spot bitcoin ETFs, sending the price of bitcoin to a more than one-year high of over $31,000 on June 23.
Fidelity declined to comment.
The Boston-based financial firm is also part of a consortium that includes market makers Citadel Securities and Virtu Financial, retail broker Charles Schwab, and venture capital firms Paradigm and Sequoia Capital, which recently launched a crypto exchange called EDX Markets.
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View Details » “There’s a lot of optimism here that you’re going to get a bitcoin ETF,” said Edward Moya, senior market analyst at Oanda.
“If that does get done, it could open the door for much more institutional money and probably some high-net-worth retail traders to get back into crypto,” he said.
Futures-based bitcoin ETFs that track the price of bitcoin futures contracts have been allowed by regulators since October 2021.
But the SEC has in recent years rejected dozens of applications for spot bitcoin ETFs, which are a publicly traded investment vehicles that directly track the price of bitcoin, including one by Fidelity in January 2022, over concerns that the underlying market could be manipulated.
The game changer for many people this time around was BlackRock applying for a spot bitcoin ETF, because it files for ETFs only when it believes it can get them approved, Moya said.
The ETF filing has helped reverse negative sentiment in the bitcoin and broader cryptocurrency markets, after a series of crypto company meltdowns, including the sudden collapse late last year of exchange FTX, which authorities allege was running a multi-billion dollar fraud.
More recently, regulatory scrutiny has weighed on the sector. This month, Binance and Coinbase Global, two of the biggest crypto exchanges, were sued by the SEC for allegedly violating its rules, which the pair deny.
Investors and speculators view the recent spot bitcoin ETF filings as a vote of confidence for the crypto space, said Alex Adelman, chief executive of bitcoin rewards company Lolli, especially “since institutions like BlackRock and Fidelity provide the expertise and custodial services top retailers rely on to serve global consumers.”
Separately, the SEC is itself being sued by Grayscale Investment over the regulator’s rejection of Grayscale’s application to convert its flagship spot Grayscale Bitcoin Trust into an ETF.
That case, which could wrap up by the end of summer, hinges on the SEC having previously approved certain surveillance agreements to prevent fraud in bitcoin futures-based ETFs, with Grayscale arguing that the same setup should apply to its spot fund, since both spot and futures funds rely on bitcoin’s price.