Fidelity may be planning moves in the crypto market with the launch of a bitcoin spot ETF or a potential acquisition of Grayscale.
The world’s third-largest asset manager, Fidelity has grown its digital asset presence significantly over the years. Its cryptocurrency-dedicated offshoot, FDA, received a New York Trust Charter and launched European operations in 2020.
The FDA has spearheaded initiatives such as the Fidelity crypto offering, which allows users to trade bitcoin and ethereum along with stocks.
The company has also advocated for the inclusion of digital assets in 401(k) investing, illustrating its belief in the long-term potential of cryptocurrencies.
The exciting part of the current rumors is the direction Fidelity might be taking. According to Andrew Parish, co-founder of Arch Public, Fidelity might be considering a purchase of Grayscale or an application for a bitcoin spot ETF.
Grayscale, currently operating 17 cryptocurrency trusts, is a significant player with the Bitcoin Trust (GBTC) leading with $16.5 billion AUM.
If Fidelity opts for a bitcoin spot ETF, it would diverge from Grayscale’s trust-based approach by allowing for bitcoin redemption, a feature currently unavailable in the GBTC model.
However, Fidelity’s move would not be without its challenges, as demonstrated by Grayscale’s unsuccessful attempt to convert the GBTC to a bitcoin spot ETF, leading them to sue the Securities Exchange Commission (SEC) in June 2022.
A race with BlackRock?
While the crypto world mulls over these possibilities, Fidelity’s move follows closely behind BlackRock’s recent bitcoin spot ETF application, creating a sense of a race among the financial giants.
BlackRock’s recent filing, seen as a positive step towards legitimizing the industry, stirred optimism and brought attention to its possible implications. The entry of these two asset management titans into the bitcoin market could mark a significant shift in the crypto industry.
The road ahead
As Fidelity and BlackRock push the boundaries, they are setting new standards, paving the way for other traditional financial firms to follow suit.
If the rumors turn out to be true, these moves could potentially shake up the U.S. digital asset space and have far-reaching effects on the global crypto market.
