Institutional behemoth Fidelity Investments set to launch spot BTC ETF

What

Fidelity Investments, the world’s fourth-largest asset manager, is launching a spot BTC ETF on the Toronto Stock Exchange this week.

Why

The Fidelity Advantage Bitcoin ETF (FBTC) will invest in “physical” bitcoin, whereas other BTC ETFs have been solely futures-based. It will make Fidelity the largest asset manager to have entered the crypto-ETF space.

What next

Fidelity’s entry into the cryptocurrency market is further testimony to a surge of interest in bitcoin among large institutional investors, further blurring the lines between traditional finance and the cryptosphere.

The story

The Fidelity Advantage Bitcoin ETF (FBTC), set to launch in Canada this week, will invest in “physical” bitcoin, unlike the futures-based ETFs currently listed in the US.

Fidelity applied to the Securities and Exchange Commission (SEC) eight months ago for a spot ETF license which, along with a dozen other similar applications, the US regulator is yet to approve. The FBTC will be off-limits to Fidelity’s US clients due the SEC’s position on spot ETFs, noting a possibility of fraudulent and manipulative market behaviour.

“Bitcoin is now taking up a mantle previously reserved for alternative assets, particularly gold,” says Toby Sims of Fidelity International in an article published on Fidelity International’s website. “Bitcoin’s supply is finite, which means it can retain its value even as central banks print infinitely more money. It’s also easy to transact — not as easy as established currencies, but easier than gold,” he says. “In times of uncertainty, that’s a plus.”

While US and UK regulators continue to oppose spot ETFs, regulators in other countries have welcomed traditional finance’s foray into crypto. Sweden, Germany, Switzerland, Jersey and Liechtenstein have 37 crypto ETF products spread across these countries, and there are currently 23 crypto funds in the Canadian ETF market, according to the Financial Times.

“There’s a market out there which can see the appeal of bitcoin but is basically scared of it,” says Sims. “Some investors don’t want to wade into a loosely regulated online exchange — they want a nice and easy ETF that will do the hard work for them.”