Updated 26 Mar, 2021

Fidelity Planning to Launch Its Own Bitcoin Exchange Traded Fund

Fidelity Planning to Launch Its Own Bitcoin ETF

 

Key Takeaways:

  • Fidelity Bitcoin ETF awaits approval by the SEC
  • If the proposal is approved, Fidelity will launch the first US Bitcoin ETF

Securities and Exchange Commission (SEC) to launch a Bitcoin ETF

In a move towards bigger exposure to the digital asset class, Fidelity Investments is seeking approval from the Securities and Exchange Commission (SEC) to launch a Bitcoin exchange-traded fund (ETF). Fidelity is one of the largest financial institutions in the world with over $5tn in assets under management and over 35 million customers. The step marks another milestone in the bitcoin journey into the mainstream financial system. Fidelity is already involved with Bitcoin. Fidelity Digital Asset has been offering custody to institutional investors.

The ETF, if approved by the SEC, will bear the name Wise Origin Bitcoin Trust, and will track the performance of bitcoin, measured by the Fidelity Bitcoin Index. The index was specifically created for tracking the price of the digital asset based on compiled price data from various bitcoin markets and exchanges.

If the ETF receives the green light, it would be available for purchase on popular brokerages and exchange platforms that enable trillions of dollars to change hands on a regular basis. Fidelity has long been expressing willingness to get involved with cryptocurrencies and its CEO, Abigail Johnson, has been a strong believer in the market’s potential.

SEC to Approve in the Next 45 Days

The SEC has not yet approved a Bitcoin exchange-traded fund, even though more than six companies have already filed for one in the recent past. The last one, from VanEck, was acknowledged by the SEC last week. The commission now has 45 days to approve, deny or prolong the proposal if it needs more time for review. The SEC has expressed concerns that due to the volatility of the asset and that it’s often linked to fraud and manipulation on unregulated exchanges, it could not give formal backing. To solve this, Fidelity Investments has stated in the filing the index will track only regulated exchanges.

The mainstream financial industry is becoming increasingly hopeful that a Bitcoin ETF is a matter of time. The next Chairman of the SEC under the Biden administration, Gary Gensler, has been a supporter of the digital asset class and has vowed to “work with fellow commissioners to promote new innovation but also, at the core, ensure investor protection”.