- Fidelity Investments is a financial planning and advisory firm, providing wealth management services to its clients.
- The Securities and Exchange Commission is wary of approving Bitcoin exchange-traded funds.
- Fidelity Investments has asked the SEC to approve its Bitcoin exchange-traded fund via a private call.
What did Fidelity Investments do?
Fidelity Investments held a private call with the Securities and Exchange Commission, the financial regulator of the United States of America. The purpose of the call was to persuade the SEC to expedite the approval of the company’s pending Bitcoin exchange-traded fund. The financial services company had prepared a presentation for the same. However, the task seemed to be difficult due to the SEC’s aversion to cryptocurrencies as an asset class.
The SEC, with its words and actions, is against cryptocurrencies. It has an ongoing lawsuit against Ripple Labs for its cryptocurrency, XRP and has threatened to sue Coinbase for some of its operations. In addition to this, many public officers at the SEC have condemned cryptocurrencies on the pretext that they are a bubble and will result in huge wealth erosion.
Moreover, the SEC has a history of delaying the approval of exchange-traded fund applications involving cryptocurrencies. It has held off on approving the Vaneck mutual fund that intends to invest in Bitcoin and Bitcoin futures. Thus, the chances of Fidelity’s ETF seeing the light of day seem bleak as of today.
What did the presentation entail?
As mentioned previously, Fidelity Investments had prepared a presentation to support its arguments. Fidelity Investments argued that Bitcoin’s market has matured over the decade and offers more liquidity to investors. Thus, investing in exchange-traded products with Bitcoin as the underlying asset is not as risky as the SEC deems it to be. Moreover, it is in the public interest to invest in Bitcoin cheaply as the spot trading cost and market impact of volatility have decreased significantly since the last year. Moreover, it said that the fund will invest in Bitcoin futures through the CME trading platform which is regulated and secure. Thus, the investments of the general public cannot be stolen or drained by fraudulent practices.
Furthermore, Fidelity Investments listed a number of reasons as to why the Securities and Exchange Commission should approve their exchange-traded fund immediately.
- The company pledges to provide complete transparency in the valuation and prices of its product listed on the respective exchange.
- It will personally select a trustworthy and secure custodian to hold its assets and get the fund insured.
- The company further said that Bitcoin’s market has matured over the past decade. The market is of significant size as Bitcoin’s market capitalization is over $600 billion and there is enough liquidity for retail investors. Moreover, the futures market of CME is also regulated and of significant size.
- SEC registered exchange-traded funds provide credibility to the product and induce investors to make investments and secure their financial future.
- Fidelity Investments is an established and an honest company which has dedicated years to provide quality products such as custody, mining and private Bitcoin funds since 2014.
- The exchange-traded fund it intends to launch is sponsored by Fidelity Digital Funds and offers direct exposure to Bitcoin in a safe way.