A Fidelity Bitcoin ETF Would Be Everyone’s Gain—But Grayscale’s Pain
Jeff John Roberts, 27 March 2021
This time it’s different.
For years, Bitcoin companies have been banging on the SEC’s door in hopes of launching a Bitcoin ETF—only to have the agency reply with a hard no. But now one of the companies at the door is the mighty Fidelity Investments, and that’s likely to be a game changer.
In case you missed it, the Boston-based financial giant dropped paperwork this week to create an ETF (exchange-traded fund) called the Wise Origin Bitcoin Trust—a name some say is derived from the Japanese kanji for Satoshi Nakamoto. If approved, Fidelity’s Bitcoin fund would be traded as shares on public stock exchanges alongside the company’s other ETFs dedicated to bonds, blue-chip stocks and other assets.
If this comes to pass, it would be a huge win not just for Fidelity but for everyone who owns Bitcoin. The approval of a Bitcoin ETF would add another sheen of legitimacy to cryptocurrency and, more importantly, it would lead to a flood of new investment from both retail and institutional clients. All of this would likely cause the price of Bitcoin to moon, as they say.
None of this is a sure thing, of course. As noted, the SEC has emphatically rejected dozens of previous Bitcoin ETF proposals, typically on the grounds of potential market manipulation. In the case of Fidelity, however, the firm brings an aura of old-school respectability that other applicants have lacked, and its proposal relies on pricing the Bitcoin from a variety of spot markets, including Bitstamp, Coinbase, Gemini, itBit, and Kraken—an approach likely to assuage the agency’s fears about manipulation.
Finally, Fidelity and its lawyers—who are well versed in the politics of the SEC—likely chose to file now because they sense the timing is right with a new president and SEC chair.
The upshot is that everyone is poised to be a winner: Fidelity; Bitcoin investors; and even the SEC, which has faced criticism for obstructionist policies on crypto.
