Finance

Fidelity is exploring launch of a bitcoin ETF

Fidelity Investments unveiled plans 24 March to launch an exchange-traded fund that tracks the price of bitcoin, furthering the money manager’s push to bring cryptocurrencies to mainstream finance.

The ETF, called Wise Origin Bitcoin Trust, will aim to match an index that takes spot prices from various bitcoin markets, including popular exchanges, Fidelity said in a securities filing. Fidelity Digital Assets will serve as the fund’s custodian, storing Wise Origin’s holdings.

The ETF, which requires the Securities and Exchange Commission’s approval, would mark a major step forward in the firm’s bitcoin ambitions. If it is approved, the ETF could be available for purchase on the large brokerage and wealth-management platforms that oversee trillions of dollars of individual investors’ assets.

The SEC has repeatedly rejected applications for bitcoin ETFs, blocking investors from buying into the market through a financial vehicle whose low fees and tax advantages have helped upend the way stock and bond funds are sold. But the industry remains hopeful some funds will eventually breakthrough.

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Fidelity was among the first major financial firms to embrace cryptocurrencies as an asset class, and its chief executive, Abigail Johnson, has long championed the market’s potential. The money manager’s support was an important milestone for a market that met reluctance from Wall Street over concerns about risk, regulations and stability. That resistance has faded as the prices of bitcoin and other popular digital assets have surged, drawing interest from investors large and small.

“The digital assets ecosystem has grown significantly in recent years, creating an even more robust marketplace for investors and accelerating demand among institutions,” a Fidelity spokeswoman wrote in a statement.

“An increasingly wide range of investors seeking access to bitcoin has underscored the need for a more diversified set of products offering exposure to digital assets.”

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Fidelity began experimenting with mining digital coins and using digital ledgers to execute trades in the last decade. It put some of its own money to work in a cryptocurrency fund and allowed clients to donate their digital assets to charities. In 2018, the firm launched plans to store and trade bitcoin for hedge funds and other professional investors, and currently serves as custodian to more than 100 institutions.

In September, Fidelity started offering a private bitcoin investment fund to certain qualified investors.

Other larger financial firms have declared their intentions to bring cryptocurrencies into the fold. Last month, Bank of New York Mellon. said it would hold, transfer and issue bitcoin and other digital assets on behalf of its asset-management clients. The announcement followed the move by another major custody bank, Northern Trust, to form a joint venture with Standard Chartered to store digital assets for their clients.

READ Banks are ‘lighting the touch paper’ for crypto’s explosion into mainstream

The SEC rejected applications for nine separate bitcoin ETFs in 2018, a setback for the market. Money managers, including VanEck Associates, have continued to press forward with additional filings.

Write to Justin Baer at [email protected]

This article was published by Dow Jones NEWSPLUS

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