- Fidelity has launched a spot bitcoin ETF in Canada that will start trading on Thursday.
- Fidelity is “the biggest asset manager to date with a bitcoin ETF”, Eric Balchunas, senior ETF analyst at Bloomberg said.
- Spot bitcoin ETFs trade in Europe and Canada, but only futures-based ETFs have been approved in the US.
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Fidelity Investments is about to launch an exchange traded fund (ETF) backed by bitcoin, rather than bitcoin futures, but it’s listing the fund in Canada, as US regulators have still not given these particular crypto products the go-ahead.
An affiliate of the Boston-based asset manager, Fidelity Investments Canada told Insider it would launch the Fidelity Advantage Bitcoin ETF and ETF Fund “on or around December 2” under the ticker FBTC, according to its website. The ETF’s bitcoin sub-custodian, Fidelity Clearing Canada. will acquire and hold bitcoin and investors will be able to buy and sell it on the Toronto Stock Exchange.
ETFs backed by physically settled bitcoin are available in Europe, as well as Canada, where regulators approved those funds in February this year. In August, French regulators let asset manager Melanion Capital list a spot bitcoin ETF of its own.
“We believe that cryptocurrency is a valid asset class that we would like to provide as an investment option for retail investors in Canada by including this in our product offering,” a spokesperson from Fidelity Investments Canada told Insider.
US investors only have access to bitcoin-futures ETFs for now. Fidelity filed to list a spot bitcoin ETF in the US back in March, but has not got approval to do so at this point. So far, US regulators have approved bitcoin futures ETFs run by ProShares, Valkyrie and VanEck.
Fidelity opted to offer a bitcoin spot ETF over a futures one because bitcoin futures are generally in “contango” which means the futures price is higher than the spot price of the underlying asset, which means investors can lose money when they roll their positions.
The company also said bitcoin futures ETFs may suffer from capacity constraints due to limits on the number of futures contracts an ETF is permitted to hold at any given time.
Fidelity’s history with digital assets traces back to 2014, when it began research and development efforts into blockchain technology through the Fidelity Centre of Applied Technology.
Some analysts believed Fidelity listing a bitcoin ETF in Canada was a blow to regulators in America.
“This should be embarrassing for the SEC that one of America’s biggest, most storied names in investing is forced to go up North to serve its clients,” Bloomberg Senior ETF Analyst Eric Balchunas said on Twitter.
Crypto giant Grayscale, which filed for a spot bitcoin ETF in October, sent a letter to the SEC on Monday saying it had no basis to approve bitcoin futures ETFs and not spot ones and by doing so violated the Administrative Protections Act (APA).