Fidelity Set to Launch Actual Bitcoin ETF

This week, Fidelity Investments will become the largest asset manager to launch an ETF on a cryptocurrency exchange.

The Fidelity Advantage Bitcoin ETF (FBTC) is designed to invest in “physical” spot Bitcoin, a model with the US Securities and Exchange Commission refused yet, instead of bitcoin futures, which the US financial regulator has allowed.

However, the entry of the world’s fourth largest money manager, with assets of $4.2 trillion, into the cryptocurrency market will be seen as another sign of the growing acceptance of digital currencies in the traditional investment world.

“It’s important because top-tier asset managers tend to be fast followers,” said Todd Rosenbluth, head of ETF and mutual fund research at CFRA Research. “They tend to take a wait-and-see approach to investment trends, focusing on developments often generated by smaller, smarter asset managers.”

The ETF will not be available, however, to most existing clients of the US fund group due to its Canadian listing, which means it will be off-limits to US retail investors.

The scheduled launch of FBTC on the Toronto Stock Exchange, “in or around” Thursday, according to Fidelity, along with its sister mutual fund, comes more than eight months later. made by With the SEC to launch a Bitcoin spot ETF in its home market.

This app is one of dozens that have been suspended indefinitely due to the Securities and Exchange Commission’s concerns about “fraudulent and manipulative acts and practices” in markets where bitcoin is traded and the need to “protect investors and the public interest.”

SEC . position was a challenge At the end of November, in a letter from lawyers representing the $32 billion Grayscale Bitcoin Trust (BTC) who argued that the regulator “has no basis for the position that investing in the derivatives market for an asset is acceptable to investors while investing in the asset itself is not.”

In contrast, the Canadian ETF market is becoming increasingly crowded, with seven managers — Accelerate Financial Technologies, 3iQ, CI First Asset, Evolve ETFs, Horizon ETFs, Ninepoint Partners and Purpose Investments — already offering 23 funds, according to data from TrackInsight.

In all, ETFs, which invest in ether and bitcoin, have a combined assets of $5.6 billion. According to TrackInsight, the European jurisdictions of Sweden, Germany, Switzerland, Jersey and Liechtenstein have an additional 37 cryptocurrency exchanges with an additional $11.4 billion in assets.

The first launch in Australia is expected soon, but while the US has so far only allowed futures-based ETPs, some jurisdictions such as the UK have not, with the Financial Conduct Authority, the UK regulator , warning that anyone investing in crypto assets “must be prepared to lose all their money.”

WisdomTree and VanEck, who each manage about $75 billion in ETFs worldwide, are the two biggest names to have entered the European market, but Fidelity is dwarfed by it.

Other big names are likely to follow suit. Ignite Europe, an independent news service owned by the Financial Times, I mentioned recently That UBS and State Street Global Advisors, as well as Fidelity, have been looking into the possibility of developing cryptocurrency products.

Last week, Invesco launched the Deutsche Börse’s spot Bitcoin ETF, the Invesco Physical Bitcoin ETP (BTIC), although recently pulled out Its application to the US-listed Bitcoin futures ETF.

“Fidelity is the latest in a growing list of industry heavyweights looking to enter the fray, and last week’s launch of Invesco in Europe was another notable example. Others may follow suit, particularly as retail interest continues to grow,” said one industry figure.

FBTC will charge an annual management fee of 40 basis points, lower than most of its competitors, with an administration expense ratio “estimated not to exceed 95 basis points.”

Cryptocurrencies are increasingly viewed by key figures in the investment industry as assets that can, in moderation, improve the risk-reward characteristics of large-scale portfolios.

Toby Sims of Fidelity International, the group’s offshore company based in Boston, wrote recently An alternative asset whose performance is unlikely to mirror that of the mainstream markets is attractive.

“Bitcoin is now taking on a mantle previously held for alternative assets, notably gold. Bitcoin’s supply is finite, which means it can hold its value even as central banks print infinitely more money. It’s also easy to make transactions — not as easy as established currencies. out, but it’s easier than gold. In times of uncertainty, that’s an advantage.”

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Sims added, “This is where the Bitcoin ETF starts to make sense. There is a market that can see the allure of Bitcoin but is fundamentally afraid of it. Some investors don’t want to get into a loosely regulated online exchange – they want a nice, easy-to-make ETF out there. He would do the hard work for them.”

“We believe cryptocurrency is a valid asset class that we would like to offer as an investment option to retail investors in Canada,” said Kelly Krellman, Senior Vice President of Product and Marketing at Fidelity Investment Canada.

“This product will provide investors with exposure to emerging technology, and its inclusion in a conventional and institutional retail portfolio of stocks and bonds may be beneficial from a portfolio diversification point of view.”

Rosenbluth believes Fidelity was likely to have “a success because they could use it in their various portfolios. Fidelity does a good job of making their own products accessible and easy to understand for their brokerage clients.”

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