Some of the world’s asset managers haven’t given up hope yet on the prospect of a U.S. bitcoin ETF that actually holds bitcoin (whatever that means) as Fidelity Investments, the world’s fourth largest asset manager with assets of US$4.2 trillion, puts in a bid to launch a bitcoin ETF with real bitcoin inside in the U.S., even as it launches one in Canada.
Unlike the ProShares Bitcoin Strategy ETF, which uses CME Group’s bitcoin futures to track the price of bitcoin, Fidelity Advantage Bitcoin ETF (FBTC) is designed to invest in “physical” spot bitcoin, a model that the U.S. Securities and Exchange Commission has so far rejected.
FBTC is scheduled to launch on the Toronto stock exchange on Thursday and comes more than eight months after it filed with the SEC to launch a similar spot bitcoin ETF in its home market.
Fidelity Investments as well as a dozen or more other hopefuls, have seen their applications for a U.S. spot-based bitcoin ETF put on hold indefinitely, as the SEC continues to be concerned over “fraudulent and manipulative acts and practices” in the markets where bitcoin is traded.
That SEC position was challenged at the end of last month in a latter from lawyers representing the US$32 billion Grayscale Bitcoin Trust who argued that the regulator had “no basis for the position that investing in the derivatives market for an asset is acceptable for investors while investing in the asset itself is not.”
With Fidelity Investments, the Canadian cryptocurrency ETF market is growing increasingly crowded, with no less than seven managers already offering 23 different cryptocurrency funds, according to data from TrackInsight.
Data from TrackInsight also reveals that Canadian cryptocurrency ETFs which invest in ether as well as bitcoin, with combined assets of some US$5.7 billion, are rapidly catching up with Europe’s US$11.4 billion cryptocurrency ETF products.
Australia will also see the first launch of a bitcoin ETF that holds physical bitcoin next year.
WisdomTree and VanEck, which each manage around US$75 billion in ETFs worldwide are some of the biggest names to have entered the European market for cryptocurrency ETFs, but would be dwarfed by Fidelity Investments.
Despite their volatility, cryptocurrencies are increasingly being seen by mainstream investment industry figures as assets that, in moderation, could potentially improve the risk-reward characteristics of broad-based portfolios.