Fidelity Investments to Introduce Its Own Bitcoin Fund In A Bid To Strengthen Position In The Virtual Currency Market

Fidelity Investments, a multinational financial services corporation based in Boston, is looking to introduce its bitcoin fund in a bid to strengthen its position in the virtual currency market. 

It filed an S-1 form for a Bitcoin ETF with the United States Securities and Exchange Commission, through its subsidiary FD Funds Management. The ETF is to be called Wise Origin Bitcoin Trust upon approval. ETFs are security types that can track an index, sector, commodity, or other assets, and can also be bought or sold on the stock exchange, just like regular stocks.

The ETF is intended to track Bitcoin performance as measured by the Fidelity Bitcoin Index, which was created to follow the digital coin and reflect its performance in dollars.

If this request by Fidelity Investments proves successful, it will be the first of its kind in the United States. Fidelity Investments is however not the first company to aspire to try this route. There have been about nine previous applications for a Bitcoin ETF which the SEC has failed to grant, with claims the coin was too volatile and didn't want to put Investor's capital at risk. The Securities and Exchange Commission also argued that the market just wasn't ready for it. There have however been reports that they approved an ETF proposal from the investment management company, VanEck.

Fidelity Investments is hardly new to the world of virtual assets. They have consistently tried to bring crypto to the mainstream of finance. In 2018, it created Fidelity Digital Assets, which effectively managed and executed cryptocurrency operations. This alone got investors interested in their company. It also tried its hands at mining cryptocurrency, which allowed customers to donate coins to various charities. 

Although the Wise Origin Bitcoin Trust isn't going to be used to sell BTC, it will be using BTC to pay for expenses that qualify as the sale of digital assets under the guidance of the Internal Revenue Service. According to Fidelity Investments, investors will access the ETF through a brokerage account without any obstacles or risks that are involved with trading Bitcoin.

Bitcoin assets, just like other digital currencies, have grown immensely, especially due to the coronavirus pandemic. The coin which traded at $10,000 a year ago has exceeded its market cap of $1 trillion, establishing itself as the world's most valuable digital currency. It currently trades at about $52,430.

A Bitcoin Exchange-Traded Fund will have effects on the crypto market as ETFs are being regulated by the government. This works for investors who previously couldn't invest in the coin due to its independence from governments. This, however, doesn't exempt them from the volatile nature of the coin.