A Fidelity Investments location in New York.
Scott Mlyn | CNBC
Fidelity Investments prepares to launch its own publicly traded Bitcoin fund as the investment giant works to cement its clout in the digital asset and virtual currency market.
FD Funds Management, a subsidiary of Fidelity, announced on Wednesday that it is planning to provide financial assistance to an exchange-traded fund called the Wise Origin Bitcoin Trust.
The company filed a Form S-1 with the Securities and Exchange Commission, a preliminary registration statement for the fund.
Fidelity confirmed that it filed a prospectus to sponsor a Bitcoin ETF, but said that due to the tentative nature of the filing, it could not comment further.
If the ETF is approved by the SEC, it will track Bitcoin’s performance using the movement of the Fidelity Bitcoin Index, a barometer the investment giant set up to track the price of the digital currency.
However, whether the SEC approves the plan remains a key question. The regulator has so far not given any company permission to start a Bitcoin ETF, arguing that despite a growing number of applications, the market is not yet ready.
The SEC last week confirmed a Bitcoin ETF proposal from VanEck.
Although the Fidelity backed trust has no plans to sell Bitcoin, it will use the cryptocurrency to pay for certain expenses that will be treated as a sale of such digital currency under current IRS guidelines.
Of course, Fidelity’s offer to support a Bitcoin ETF is far from being the first to venture into the expanding world of digital currencies.
The company founded Fidelity Digital Assets in 2018, a subsidiary that has since implemented its cryptocurrency custody and trade execution operations. The early confirmation was enough to attract clients from institutional investors such as hedge funds and family offices, according to the top executive.
Bitcoin and thousands of other digital coins have seen a spate of purchases over the past 12 months as a growing number of investment managers and banks feel comfortable as a potential investment and medium of exchange.
Although the world’s largest digital asset has struggled for the past few weeks, its current price at around $ 52,430 is well above what it was under $ 10,000 a year ago, according to Coin Metrics.