Pressure Builds On The SEC As Fidelity Digital Joins The Spot Bitcoin ETF Race

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Asset management giant Fidelity resubmitted its application for Wise Origin Bitcoin Trust, a spot bitcoin ETF. This move comes shortly after BlackRock’s iShares unit filed for its own spot Bitcoin ETF. It reflects the growing interest in regulated investment vehicles for cryptocurrencies.

The resubmission of Fidelity’s application reflects the increasing recognition of spot bitcoin ETFs as a pivotal development in the cryptocurrency industry.

Fidelity Resubmits Application for Spot Bitcoin ETF, Following BlackRock’s Lead

Fidelity’s decision to resubmit its application comes after the US Securities and Exchange Commission (SEC) rejected its initial attempt in 2022.

Fidelity is determined to navigate the regulatory landscape. Hopefully, the asset manager will secure approval for its spot Bitcoin ETF this time.

https://twitter.com/LordOrdinal/status/1674471608944062464

Citing a paragraph in the filing:

Fidelity Digital Assets Services, LLC (‘FDAS’), a regulated custodian licensed by the New York Department of Financial Services, will be responsible for the custody of the Trust’s bitcoin (the ‘Custodian’).

Fidelity’s updated filing includes a “surveillance sharing agreement” with an undisclosed US spot-based bitcoin trading platform. This is meant to address the SEC’s concerns regarding market manipulation, as the financial regulator has approved or disapproved such applications to list and trade Trust Issued Receipts before.

The determining factor for approval or disapproval is whether the listing applicant has established a “comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying commodity to be held.”

This criterion aims to ensure that a substantial portion of the trading activity occurs within regulated and compliant platforms. It would mitigate potential risks associated with unregulated offshore exchanges.

Fidelity Adds To The Pile Of Applications On The SEC’s Desk

Besides Fidelity, other notable fund companies, including Invesco, BlackRock, WisdomTree, and Cathie Wood’s Ark Invest, have also submitted similar filings. All seven filings underscore the growing interest in this sector of institutional finance.

The institutions are coming for crypto! In the past two weeks we have had:

– BlackRock, Fidelity, VanEck, WisdomTree & Invesco filing spot #Bitcoin ETFs

– EDX Markets backed by Citadel, Virtue, Fidelity, Charles Schwab etc launches

– HSBC in Hong Kong offers Bitcoin & Ethereum…

— Coin Bureau (@coinbureau) June 30, 2023

In its filing, Fidelity emphasizes the benefits of a spot bitcoin ETF, highlighting the significance of investor protection and risk mitigation. The asset manager acknowledges crypto participants’ challenges due to the insolvencies of custodians and centralized exchanges.

The asset manager highlights that spot bitcoin ETFs would have provided vital safeguards for countless investors during such turbulent times.

Industry Experts Cautiously Await SEC’s Decision

The SEC is currently evaluating new applications related to cryptocurrencies. While the agency’s decision is still pending, the industry has a sense of cautious optimism thanks to BlackRock.

Market leader BlackRock manages upwards of $ 9.1 trillion in assets. The firm is renowned for its successful ETF filings, generating positive expectations, with experts closely observing the outcome. However, industry analysts and insiders maintain a degree of caution, as the SEC’s approval may hinge on a crucial factor:

A significant majority of bitcoin trading must occur on U.S.-based crypto exchanges.

Nevertheless, BlackRock has expressed confidence in the potential of these new cryptocurrency applications. With its expertise and influence, BlackRock has emerged as a key player in the cryptocurrency market. Their positive outlook has sparked enthusiasm among industry stakeholders who anticipate a favorable outcome from the SEC’s evaluation.

The SEC’s focus on domestic cryptocurrency exchanges aligns with its investor protection and regulatory oversight commitment. It controls a significant majority of trading volume taking place on US platforms.

In so doing, the SEC aims to foster a more secure and transparent cryptocurrency ecosystem. This approach seeks to minimize the potential for market manipulation, fraud, and other illicit activities often associated with unregulated exchanges.

SEC took action on insider trading. That was investor protection and faithful allegiance to the law. Suing companies to oblivion without any thought or remorse to investor losses is not. One of SEC's main mandate is to protect investors, is it not?

— Vincent Wong (@Immortal88) June 29, 2023

In light of these considerations, industry experts closely monitor the SEC’s evaluation process. The outcome of this regulatory assessment will impact the specific applications under review and set a precedent for future cryptocurrency-related ventures seeking regulatory approval.

The crypto community, driven by innovation and technological advancements, eagerly anticipates the SEC’s decision in what would be a significant milestone in the industry’s ongoing journey toward mainstream acceptance.

Fidelity Mounts Pressure On The SEC

It is worth mentioning that the regulatory agency faces enormous pressure to approve some, if not all, applications. Failure to do so would portray the SEC as an industry obstacle. Already, the agency is under scrutiny on speculation of ill intentions for the future of crypto led by chair Gary Gensler.

The financial regulator has also been attacked for driving crypto businesses away from the United States. Market participants have advocated against weakening domestic consumer confidence in cryptocurrencies in the country.

The US is losing the bitcoin movement because of regulation, Cathie Wood has said.

— unusual_whales (@unusual_whales) May 26, 2023

Consequently, crypto firms are now drawing toward Hong Kong, Dubai, Singapore, and the UK. These regions continue to present as greener pastures, drawing crypto innovation and capital into their territories.