Fidelity Investments joined several different firms in receiving approval for a spot bitcoin exchange-traded product (ETP) from the SEC this week. The approval has been years in the making and is a milestone decision from the SEC. The launch augurs a new era for crypto accessibility for investors. Fidelity Investments’ FBTC, the Fidelity® Wise Origin® Bitcoin fund, stands out as one of the first available options. The firm was one of the first to file a spot bitcoin application in 2021.
The spot bitcoin ETP looks to track the performance of bitcoin. Financial advisors and individual investors alike can find the strategy on Fidelity’s various online platforms, priced at 25 basis points. The fee will not apply until August 1, 2024, which sets it apart from some of its rivals.
“We’ve long believed a spot-priced exchange traded product would be an efficient way for investors to gain exposure to bitcoin,” said Cynthia Lo Bessette, Head of Digital Asset Management at Fidelity Investments.
“With more than a decade of engagement and experience honing our expertise in the digital assets space and building an institutional-grade custody platform, Fidelity delivers a deep understanding of the digital assets ecosystem. It is in a unique position as a long-term leader in the financial services and the emerging crypto landscape,” added Lo Bessette.”
Spot Bitcoin ETP FBTC's Approach
The strategy appears on the Cboe BZX Exchange, with a goal of tracking the performance of bitcoin as measured by the performance of the Fidelity Bitcoin Reference Rate, per its prospectus. The ETP’s index uses bitcoin price feeds from eligible bitcoin spot markets and a volume-weighted median price methodology calculated every 15 seconds.
The new era in bitcoin investing presents a notable opportunity for investors who’ve wanted easier access to the cryptocurrency. For those investors looking to add exposure, the Fidelity® Wise Origin® Bitcoin Fund might be one option to consider.
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This product is for investors with a high risk tolerance. It invests in a single asset, bitcoin, which is highly volatile and can become illiquid at any time.
Bitcoin is created, issued, transmitted, and stored according to protocols run by computers in the Bitcoin network. It is possible the Bitcoin protocol has undiscovered flaws that could result in the loss of some or all assets held by the Fund. There may also be network-scale attacks against the Bitcoin protocol, which result in the loss of some or all of assets held by the Fund. Advancements in quantum computing could break Bitcoin’s cryptographic rules. The Fund makes no guarantees about the reliability of the cryptography used to create, issue, or transmit Bitcoin held by the Fund. Bitcoin exchanges may suffer from operational issues, such as delayed execution, that could have an adverse effect on the Fund. Digital asset exchanges have been closed due to fraud, failure or security breaches. Any of the Fund’s assets that reside on an exchange that shuts down or suffers a breach may be lost.
FBTC is not an investment company registered under the Investment Company Act of 1940 (the “1940 Act”) and is not subject to regulation under the Commodity Exchange Act of 1936 (the “CEA”). As a result, shareholders of FBTC do not have the protections associated with ownership of shares in an investment company registered under the 1940 Act or the protections afforded by the CEA.
Digital assets are highly volatile, and their market movements are very difficult to predict. Various market forces may impact their value. That includes but is not limited to supply and demand, investors’ faith and their willingness to purchase it using traditional currencies, investors’ expectations with respect to the rate of inflation, interest rates, currency exchange rates, an evolving legislative and regulatory environment in the U.S. and abroad, and other economic trends. Investors also face other risks, including significant and negative price swings, flash crashes, and fraud and cyber- security risks. Digital assets may also be more susceptible to market manipulation than securities.
The performance of FBTC will not reflect the specific return an investor would realize if the investor actually purchased bitcoin. Investors in FBTC will not have any rights that bitcoin holders have. They will not have the right to receive any redemption proceeds in bitcoin.
The Fidelity® Wise Origin® Bitcoin Fund material must be preceded or accompanied by a prospectus. Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses.
Fidelity Investments® is an independent company, unaffiliated with VettaFi. There is no form of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments. Nor is such a relationship created or implied by the information herein. Fidelity Investments has no involvement with the preparation of the content supply from VettaFi. It does not guarantee, or assume any responsibility for its content.