Asset Manager Fidelity is expected to file a bitcoin spot exchange-traded fund (ETF) with the U.S. Securities and Exchange Commission (SEC), joining other major money managers who have recently applied for bitcoin ETFs. This was reported by Block on Tuesday, citing an informed source.
In the past two weeks, BlackRock (BLK.N), WisdomTree (WT.N), InvescoVanEck (IVZ.N), and Bitwise have filed applications with the SEC to launch spot bitcoin ETFs. Bitcoin’s price has reached a record high of more than $31,000 in less than a year, on June 23.
Fidelity declined to comment. The Boston-based financial firm is also a member of a consortium that includes market-makers Citadel Securities and Virtu Financial (VIRT.O), retail broker Charles Schwab (SCHW.N), as well as venture capital firms Paradigm and Sequoia Capital. This consortium recently launched a cryptocurrency exchange called EDX Markets.
“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.”
Regulators have allowed bitcoin-based ETFs, which track the value of bitcoin futures. But the SEC has rejected numerous applications in recent years for spot bitcoin ETFs. These are publicly traded investment vehicles which directly track the bitcoin price, including one from Fidelity in January 2022, due to worries that the market could be manipulated.
The filing of a spot bitcoin ETF by BlackRock was a game-changer for many this time. It only files ETFs if it believes they can get approved, Moya added.
The ETF filing helped reverse negative sentiment in the bitcoin market and broader crypto markets after a series of crashes of crypto companies, including the sudden collapse of exchange FTX, which authorities accuse of running a fraud worth billions of dollars.
Additionally, the regulatory scrutiny on the sector has increased. This month, Binance and Coinbase Global were sued by the SEC for allegedly breaking its rules. Both deny the allegations.
Investors see the recent applications for spot bitcoin ETFs as a positive sign for the crypto industry. “Especially since institutions like BlackRock and Fidelity provide the expertise and custodial services top retailers rely on to serve global consumers,” said Alex Adelman, chief executive officer of Bitcoin rewards company Lolli.
Separately, the SEC is being sued by Grayscale Investments over the regulator’s refusal to approve Grayscale’s application to convert its flagship spot Grayscale Bitcoin Trust (GBTC.PK) into an ETF. The SEC must have approved certain surveillance agreements in order to prevent fraud on bitcoin futures ETFs. Both spot and futures funds depend on the bitcoin price, so it is argued that this setup should also apply to their spot fund.
Reporting by John McCrank in New York, Niket Nishant in Bengaluru, additional reporting by Hannah Lang in Washington, and editing by Krishna Chandra Eluri, Michelle Price and Lisa Shumaker. Our Standards: The Thomson Reuters Trust Principles.
