US-Based Institutions Actively Accumulate Bitcoin Following BlackRock's ETF Bid, On-Chain Analyst saysIn a move that has reignited hopes for the cryptocurrency industry, asset management giant Fidelity has refiled its application to list and trade shares of its Wise Origin Bitcoin Trust spot bitcoin exchange-traded fund (ETF). The announcement comes amidst a flurry of similar applications from prominent financial institutions, including BlackRock, WisdomTree, Invesco, and VanEck.
These filings signal a renewed interest in the crypto sector, providing a much-needed boost after a period of uncertainty. While the Securities and Exchange Commission (SEC) has rejected numerous spot bitcoin ETF applications in the past, the approval of the first bitcoin futures ETF in 2021 has raised expectations for a favorable outcome.
Fidelity Revives Spot Bitcoin ETF Application
Fidelity Investments, one of the world’s largest asset managers, has resubmitted its application for a spot bitcoin ETF to the U.S. Securities and Exchange Commission. The filing, made through the listing exchange Cboe Global Markets, seeks approval to list and trade shares of the Wise Origin Bitcoin Trust. This move by Fidelity reflects the growing interest of established financial institutions in expanding their offerings to include digital assets.
The decision to refile the application comes after the SEC rejected Fidelity’s previous attempt in January 2022. The regulator cited concerns about the potential for fraudulent and manipulative practices, emphasizing the need to protect investors and the public interest. However, with the recent approval of the first bitcoin futures ETF in October 2021, industry experts believe there may be a more favorable regulatory environment for spot bitcoin ETFs going forward.
Major Asset Managers Join the Crypto Bandwagon
Fidelity’s renewed application is part of a larger trend among traditional financial heavyweights seeking to enter the crypto market. BlackRock, WisdomTree, Invesco, and VanEck have also submitted paperwork to list spot bitcoin ETFs on various exchanges, including Cboe BZX, Nasdaq, and NYSE Arca. The growing interest from these prominent asset managers highlights the increasing acceptance and recognition of cryptocurrencies as an investment asset class.
The crypto industry has faced significant challenges in recent times, with notable incidents such as the collapse of the FTX exchange and a regulatory crackdown by the SEC. However, the influx of applications from established financial institutions has injected renewed optimism into the sector. This development has been reflected in the market, with Bitcoin surging to a one-year high of over $31,000 following the news.
Regulatory Hurdles and the Future of Bitcoin ETFs
Despite the growing interest and optimism surrounding spot bitcoin ETFs, regulatory hurdles remain a significant obstacle. The SEC has consistently rejected previous applications, citing concerns about market manipulation and investor protection. The approval of the first bitcoin futures ETF in 2021 represented a breakthrough but did not guarantee a favorable outcome for spot bitcoin ETFs.
The distinction between spot and futures-based ETFs is crucial. Spot ETFs directly track the price of the underlying cryptocurrency, whereas futures-based ETFs follow the price of bitcoin futures contracts. Regulators may view spot bitcoin ETFs as more susceptible to market manipulation, as they rely on the underlying asset’s immediate price movements. In contrast, futures-based ETFs offer more regulated and standardized trading environments.
Conclusion
The refiled application by Fidelity for a spot bitcoin ETF, along with similar moves by other major asset managers, indicates a growing interest and confidence in the crypto industry. While previous spot bitcoin ETF applications have faced rejection due to regulatory concerns, the approval of the first bitcoin futures ETF in 2021 has raised hopes for a more positive outcome. The filing of these applications represents a significant development for the cryptocurrency market, offering increased accessibility and legitimacy to digital assets.
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