Fidelity Investments, one of the largest asset managers in the world, has announced its intention to file for a spot bitcoin exchange-traded fund (ETF) in the US. The company said it plans to submit an application to the Securities and Exchange Commission (SEC) in the coming weeks.
A spot bitcoin ETF is a type of investment product that tracks the price of bitcoin directly, rather than through derivatives or other instruments. It allows investors to gain exposure to the cryptocurrency without having to buy, store, or manage it themselves. A spot bitcoin ETF would also provide more transparency and liquidity to the bitcoin market, as well as lower fees and risks for investors.
Fidelity is not the first company to pursue a spot bitcoin ETF in the US. Several other firms, such as VanEck, Valkyrie, and NYDIG, have already filed similar applications with the SEC, but none have been approved so far. The SEC has been reluctant to authorize a spot bitcoin ETF, citing concerns over market manipulation, fraud, custody, and investor protection.
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However, Fidelity believes that it has the expertise and resources to address these issues and meet the SEC’s standards. The company has been involved in the cryptocurrency space since 2014, when it launched Fidelity Digital Assets, a subsidiary that offers custody and trading services for institutional clients. Fidelity also has a strong reputation and track record in the traditional financial industry, managing over $10 trillion in assets for more than 35 million customers.
Fidelity’s announcement comes at a time when the demand for bitcoin and other cryptocurrencies is growing rapidly, especially among institutional investors. According to a recent survey by Fidelity, 70% of institutional investors expect to invest in digital assets in the future, and 90% of them find something appealing about the asset class. Moreover, several countries, such as Canada and Brazil, have already approved spot bitcoin ETFs, creating more pressure on the US to follow suit.
If Fidelity’s application is successful, it could pave the way for more innovation and adoption in the crypto space. A Bitcoin ETF would provide a regulated and transparent way for investors to access the potential benefits of Bitcoin, such as diversification, hedge against inflation, and exposure to a new asset class. It would also increase the liquidity and legitimacy of the Bitcoin market, which could attract more institutional and retail investors, as well as regulators and policymakers. Moreover, it could spur more innovation and competition in the crypto industry, as other companies would follow Fidelity’s lead and launch their own products and services.
However, Fidelity’s application is not guaranteed to be approved by the SEC, which has so far rejected or delayed every Bitcoin ETF proposal that has come its way. The SEC has expressed concerns about the volatility, manipulation, fraud, and custody issues of the Bitcoin market, and has demanded that any Bitcoin ETF applicant must demonstrate how they can protect investors from these risks. Fidelity has stated that it believes it can meet the SEC’s standards and expectations, but it remains to be seen whether the SEC will be convinced.
Fidelity’s application for a Bitcoin ETF is a significant milestone for the crypto industry, as it shows that a major financial institution is confident and committed to bringing Bitcoin to the mainstream. If approved, it could pave the way for more innovation and adoption in the crypto space, as well as more regulatory clarity and acceptance. However, there are still many challenges and uncertainties ahead, and Fidelity will have to overcome the SEC’s skepticism and scrutiny before it can launch its product.