By
Chimamanda U. Martha
April 26th, 2024
Following BlackRock’s growing chance of an approval, Fidelity Investments has submitted another application for a spot Bitcoin ETF.
Asset management firm Fidelity Investments has submitted another filing for a spot Bitcoin exchange-traded fund (ETF). Fidelity is making another play at a spot ETF after a previous rejection from the United States Securities and Exchange Commission (SEC).
Last year, the SEC rejected Fidelity’s proposal for the Wise Origin spot Bitcoin ETF. The SEC said the proposal did not contain enough measures to detect and prevent market manipulation and fraud. According to the Commission, the ETF must be designed to prevent fraudulent activity.
On Wednesday, CoinSpeaker reported that the company was close to refiling a spot Bitcoin ETF proposal, according to people familiar with Fidelity’s plans. The assumption was a possible Tuesday filing for Fidelity’s second attempt at a spot Bitcoin ETF. Fidelity had already launched a spot Bitcoin ETF in Canada in 2021, called the Fidelity Advantage Bitcoin.
Fidelity’s Second Attempt Comes Shortly After BlackRock’s
Interestingly, giant asset manager BlackRock filed an application for a spot Bitcoin ETF barely two weeks ago. BlackRock’s iShares Bitcoin Trust ETF application includes crypto exchange Coinbase (NASDAQ: COIN) as the Bitcoin custodian, and Bank of New York Mellon (BNY Mellon) as the cash custodian.
Initially, BlackRock’s chance of approval seemed bleak because the SEC has rejected all spot Bitcoin ETF proposals ever submitted. However, some Bloomberg analysts believe that the asset manager now has a 50% chance of receiving approval. Senior ETF analyst Eric Balchunas says this is because of Grayscale’s SEC case. Bloomberg Senior legal analyst gave Grayscale a 70% chance of triumph against the SEC after recent oral arguments in court. Consequently, the analysts believe that the SEC could soon approve BlackRock’s application, allowing a traditional finance company to run a Bitcoin ETF, while ignoring Grayscale.
Grayscale May Indirectly Help Secure the First Spot Bitcoin ETF in the US
Last June, Grayscale Investments filed a lawsuit against the SEC after the Commission rejected its spot Bitcoin ETF proposal. The SEC also said Grayscale’s proposal did not adequately include measures to prevent market fraud and manipulation. Grayscale CEO Michael Sonnehshein said he was disappointed, and “vehemently disagrees” with the regulator’s position.
Another reason BlackRock could snag approval is the amendment of its filing that includes a Spot BTC SSA. The SSA is a bilateral agreement that ensures surveillance sharing to prevent market fraud. Recently, the Cboe BZX Exchange also amended an ETF filing to include an SSA. The proposers likely hope the market surveillance agreement addresses the SEC’s concerns about market manipulation.
Fidelity Investment’s decision to make another play for a spot Bitcoin ETF may be connected to BlackRock’s possible approval. The likelihood that the SEC would approve more proposals may be high if it allows BlackRock.
The SEC rejected the first-ever spot Bitcoin ETF application proposed in 2013 by the Winklevoss Bitcoin Trust. Since then, the Commission has rejected applications from Vaneck, Fidelity, Grayscale, the New York Digital Investment Group (NYDIG), Wilshire Phoenix, and Bitwise.
