February 21, 2024

Major asset manager Fidelity is preparing to file its own spot bitcoin exchange-traded fund (ETF) application, along with other large asset managers such as BlackRock.

BlackRock recently filed its own spot bitcoin exchange-traded fund on June 15, drawing significant interest from other asset managers.

Fidelity Prepares Bitcoin ETF Filing As Competition Intensifies

With its spot bitcoin ETF, Fidelity will join a growing number of institutions racing to be the first to launch and get approval for a spot bitcoin ETF. Fidelity followed BlackRock, the world’s largest asset manager, in applying for the ETF, the filing showed. According to reports, Fidelity’s application could be filed as early as this week, which would be Fidelity’s second attempt to launch a spot bitcoin ETF. Fidelity It also filed in 2022, but failed to win approval from the U.S. Securities and Exchange Commission (SEC).

Over the past few weeks, several asset managers including Invesco (IVS.N), WisdomTree (WT.N), Bitwise, VacEck and the already mentioned BlackRock have filed with the SEC for spot bitcoin ETFs. The price of bitcoin (BTC) has also seen a sharp rise as a result of the filing, rising to a one-year high of more than $31,000 on June 23.

Fidelity is a well-known name in the financial sector, managing more than $11 trillion in assets. Additionally, it has been involved in the cryptocurrency ecosystem since 2018, operating exchanges and institutional custody services. Since February 2022, the company has also offered fund products to European clients through Fidelity International.

Game changing development

The potential launch of a spot bitcoin exchange-traded fund could be a game-changer, giving investors exposure to the cryptocurrency market without having to buy or hold the underlying asset, market experts say. Given the company’s importance, size, and stature, BlackRock’s ETF application has sparked renewed interest in a Bitcoin ETF. Edward Moya, senior market analyst at Oanda, said the market is quite optimistic at the moment.

“There is optimism about getting a bitcoin ETF. If that does materialize, it could open the door for more institutional money, as well as some high-net-worth retail traders, to re-enter the cryptocurrency market.”

Will the SEC change its stance?

Beginning in October 2021, the SEC will allow the launch of futures-based Bitcoin ETFs. These ETFs track the price of bitcoin futures contracts. However, when it comes to spot bitcoin ETFs, the SEC has rejected several applications. The spot bitcoin ETF, a publicly traded investment vehicle that tracks the price of bitcoin, has expressed concern that the underlying market could be manipulated.

However, many believe that BlackRock’s application for a spot bitcoin ETF could be a game-changer, as asset managers will only apply for an ETF when they know they can be approved. The document also helped somewhat to reverse negative perceptions of Bitcoin and the larger cryptocurrency market. Alex Adelman of crypto rewards fund Lolli said the recently filed spot ETF application could serve as a vote of confidence in the larger crypto ecosystem.

“Institutions like BlackRock and Fidelity provide the expertise and managed services that top retailers rely on to serve consumers around the world.”

The cryptocurrency market has been rattled by a string of adverse events and shutdowns, most notably the collapse of FTX, which authorities say is engaging in a multibillion-dollar fraud. Most recently, the SEC sued Binance and Coinbase, alleging that the pair violated several rules, an allegation that both entities deny.

The SEC itself is in legal trouble, with Grayscale Investments suing the regulator for rejecting Grayscale’s application to convert its flagship Grayscale Bitcoin Trust into an ETF. Crucial to the case is the fact that the SEC has previously approved certain oversight protocols to prevent fraudulent conduct in bitcoin futures-based ETFs. Grayscale believes the same applies to its spot funds.

BlackRock files

black stone Spot Bitcoin ETF application filed on June 15, 2023. According to a Nasdaq filing with the SEC, Coinbase Custody Trust will be the custodian for the fund’s bitcoin holdings, while BNY Mellon will be the custodian for the fund’s fiat currency. If approved, BlackRock’s ETF would be the first cryptocurrency spot ETF in the United States.

Disclaimer: This article is for informational purposes only. It does not provide or be intended to be used as legal, tax, investment, financial or other advice.