Fidelity and Goldman Sachs join latest race to offer clients exposure to Bitcoin through ETFs

• Fidelity Investments is the latest institution to file for a Bitcoin ETF with the US securities regulator. 
• Goldman Sachs also filed for a new investment product, offering exposure to Bitcoin through its linked note. 
• Demand for crypto-related products is on the rise, as the world’s first Bitcoin ETF reached $1 billion in assets under management. 

Fidelity Investments, with $4.9 million assets under management (AUM), has recently filed for a Bitcoin exchange-traded fund (ETF) with the United States Securities & Exchange Commission (SEC). Goldman Sachs joins in on the digital currency hype and has also filed an application with the regulator for a new investment product that would offer indirect exposure to BTC.

Fidelity offers investors more pathways into crypto

Preparing to launch its own Bitcoin fund, Fidelity Investments has planned to provide financial backing for an ETF called the Wise Origin Bitcoin Trust. 

Through its subsidiary, FD Funds Management, the firm filed a Form S-1 with the SEC for a Bitcoin ETF. The investment product would track the performance of the digital asset as measured by the movement of the Fidelity Bitcoin Index, which was previously created by the investment giant to track the price of BTC. 

According to the filing, Fidelity’s Wise Origin Bitcoin Trust would value its shares based on prices on Coinbase and Bitstamp. Similar to previously proposed Bitcoin ETFs, Fidelity Trust aims to provide more ways for institutional investors to get into the cryptocurrency market. Fidelity said in an official 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.

Goldman Sachs files for product with exposure to BTC

Goldman Sachs filed for a new investment product on March 19 that could give clients indirect exposure to Bitcoin. This product is not an ETF but rather a “linked note” that tracks the ARK Innovation ETF — which has exposure to Bitcoin shares. 

A linked note is similar to an ETF, which is a product tied to a security or a basket of securities. The ARK Innovation ETF is invested in the Grayscale Bitcoin Investment Trust, which gives Goldman Sachs’ clients indirect exposure to the flagship cryptocurrency.

Although the investment bank is showing interest in Bitcoin, it had a very different view on the new asset class just a year ago. Goldman Sachs previously stated that Bitcoin is “not an asset class.” However, the banking giant has recently revived plans to reopen its crypto trading desk.

The latest race to launch the first US crypto ETF

The SEC has not approved any company’s attempt to create a Bitcoin ETF to date, citing that the market is not ready, although there seems to be a growing number of applications. 

The US securities regulator rejected Wilshire Phoenix’s bid for a Bitcoin ETF in February 2021, pointing to the fact that the firm has not proven that the crypto investment product is sufficiently resistant to market manipulation.

Despite numerous rejections, there has been a race to launch the first US Bitcoin ETF, with a growing number of companies scrambling to get a seat at the table. 

The Chicago Board Options Exchange (CBOE) filed to list VanEck’s Bitcoin ETF on March 1. The SEC has since acknowledged that it is reviewing the application and subsequently has 45 days to either approve or reject the application, or extend the review period to 240 days before making a final decision. 

Anthony Scaramucci, the former White House communications director and hedge fund manager has applied for regulatory approval for a Bitcoin ETF as well, through SkyBridge Capital. The hedge fund previously launched a Bitcoin fund in late 2020, expecting an “avalanche” of institutional investors to purchase cryptocurrencies in 2021. 

World’s first Bitcoin ETF crosses $1 billion AUM

VanEck’s previous efforts at filing Bitcoin ETFs were rejected by the SEC. However, the approval of a cryptocurrency ETF in the US could be more likely following the launch of the world’s first Bitcoin ETF launched in Canada on the Toronto Stock Exchange by Purpose Investments. 

Investors’ interest in the crypto investment product was huge, as the Bitcoin ETF hit $9.65 million in volume on the first day and accumulated $421.8 million in assets under management on its second day.

On the one-month anniversary of its launch, Som Seif, CEO of Purpose Investments, announced that the investment product’s AUM crossed the $1 billion mark. 

He suggested that the recent milestone proves that investors are looking for convenient and safe access to digital currencies. He added: 

When we launched Purpose Bitcoin ETF, we knew we were filling a void in the market.

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