Fidelity Canada To Introduce Spot Bitcoin ETF For Trading

KEYPOINTS

  • Fidelity Canada has developed a spot bitcoin ETF, which will begin trading on Thursday.
  • According to Eric Balchunas, senior ETF analyst at Bloomberg, Fidelity is “the biggest asset manager to date with a bitcoin ETF.”
  • In Europe and Canada, spot bitcoin ETFs are traded, but only futures-based ETFs have been permitted in the United States.

Fidelity Investments is going to establish an exchange traded fund (ETF) backed by bitcoin, rather than bitcoin futures, but the fund will be listed in Canada because US regulators have yet to approve these crypto products.

According to its website, Fidelity Investments Canada, a subsidiary of the Boston-based asset manager, will launch the Fidelity Advantage Bitcoin ETF and ETF Fund “on or around December 2” under the ticker FBTC.

Fidelity Clearing Canada, the ETF’s bitcoin sub-custodian, will acquire and hold bitcoin, which investors will be able to buy and sell on the Toronto Stock Exchange.

In Europe, as well as Canada, where regulators approved the products in February, ETFs backed by physically settled bitcoin are accessible.

FIDELITY YET TO RECEIVE A PERMISSION FOR ETF

In August, French regulators approved Melanion Capital’s application to establish its own spot bitcoin ETF.

“We feel that cryptocurrency is a genuine asset class that we would like to include in our product offering as an investment alternative for retail clients in Canada,” a Fidelity Investments Canada official told Insider.

For the time being, US investors can only invest in bitcoin-futures ETFs. Fidelity filed a request to list a spot bitcoin ETF in the United States in March, but has yet to receive permission.

On Twitter, Bloomberg Senior ETF Analyst Eric Balchunas stated, “This should be embarrassing for the SEC that one of America’s biggest, most historic names in investment is compelled to go up North to serve its clients.”

PREVIOUSLY LAUNCHED BITCOIN ETFs

ProShares, Valkyrie, and VanEck have all had bitcoin futures ETFs approved by US regulators thus far.

Because bitcoin futures are typically in “contango,” meaning the futures price is higher than the spot price of the underlying commodity, investors can lose money when they roll their positions, Fidelity chose to offer a bitcoin spot ETF rather a futures one.
According to the business, bitcoin futures ETFs may face capacity constraints due to restrictions on the number of futures contracts an ETF can hold at any given moment.

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