Fidelity Takes Another Shot at Spot Bitcoin as Approval Hopes Grow

Asset manager follows BlackRock with fresh filing aimed at allaying SEC’s fears.

Fidelity Investments became the latest asset manager on Thursday to seek permission to offer a spot bitcoin exchange-traded fund, offering fresh fraud safeguards as issuers appear to perceive regulators’ resistance to such funds has weakened. 

The resubmitted filing by the Cboe BZX exchange seeks permission to offer the Wise Origin Bitcoin Trust. Fidelity originally filed to offer the fund in 2021 before it was rejected in January 2022 by the Securities and Exchange Commission. A Fidelity spokesperson said in an email the company has been seeking since 2014 to offer a spot bitcoin ETF. 

The $4.3 trillion asset manager joins BlackRock Inc., WisdomTree Inc. and Bitwise, who in the past two weeks have filed, or refiled, for permission to offer an ETF that actually holds bitcoin, rather than trading in crypto futures or other products, in an effort to give investors exposure to crypto prices.  

Issuers appear to be emboldened by entering into so-called surveillance-sharing agreements aimed at allaying the SEC’s concerns about fraud and market manipulation. Before the recent adoption of such agreements, the SEC rejected each of the more than 70 spot bitcoin ETF applications, which date back to 2013.  

The addition of this agreement “could potentially address the SEC’s concern about manipulation of spot bitcoin prices,” CFRA’s head of ETF Data and Analytics Aniket Ullal told etf.com in an email. “However, it still feels a little speculative, since the SEC has not given any direct indication that they are ready to approve spot bitcoin ETFs. 

The surveillance agreements are intended to reduce the possibility of market manipulation and permit broad exchanges of information about who is trading as well as clearing activity. Cathie Wood’s ARK Investment Management, with 21Shares, has taken similar steps. 

Deterring Fraud 

The filing on June 29 said Cboe agreed to take steps “helpful in detecting, investigating, and deterring fraud and market manipulation.”  

SEC Chairman Gary Gensler has made no secret of the issues he sees in the crypto industry, telling the Wall Street Journal June 8 that the space is rife with “noncompliance and hype masquerading as reality.” 

He made those comments as the regulator is being sued by Grayscale Investments, which is fighting the SEC’s denial of its effort to convert its $18.8 billion Grayscale Bitcoin Trust into the first spot bitcoin ETF. 

Earlier this month, the SEC sued Coinbase Global Inc.—BlackRock’s crypto partner in its proposed ETF—and Binance, the world’s largest crypto exchange, for violations including operating as an unregistered securities exchange. 

Grayscale has offered strong arguments against the SEC’s denial, according to industry experts who are raising their expectations that a spot bitcoin will be approved this year.  

Contact Ron Day at [email protected] or follow him on Twitter at @RonDayETF