Fidelity Spot Bitcoin ETF Sees $1.9M in Trading Volume on First Day

Not waiting for the U.S. SEC, Fidelity Investments launched a cryptocurrency exchange traded fund (ETF), one that tracks spot Bitcoin price, in Canada on Thursday. Given that Fidelity has over $4.2 trillion in assets under management (AUM), the firm has now become the largest asset manager with a Bitcoin ETF. 

Meanwhile, the fund, dubbed the Fidelity Advantage Bitcoin ETF (FBTC), has seen over 27,500 securities traded, worth over 2.4 million Canadian dollars (~$1.9 million), during its first day on the Toronto Stock Exchange (TSX). 

Fidelity Launches Physical Bitcoin ETF

Fidelity, the world’s fourth-largest fund manager, has continued its foray into the digital asset market by launching a ‘physical’ Bitcoin ETF. The ETF carries a management fee of 40 basis points and directly invests in the flagship cryptocurrency, Bitcoin.

When users purchase Fidelity Advantage Bitcoin ETF and ETF Fund, the firm buys and stores the ETF’s Bitcoin “using institutional-grade custodial services”. A Fidelity spokesperson told Insider:

“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. As to why now, we wanted to offer a front-to-back Fidelity solution with solid regulatory grounding.”

During its first trading day, FBTC fluctuated between $24.97 and $24.50 before closing at $24.86. With 27,500 securities traded during the first day, the volume might look light—after all, a Bitcoin futures ETF in the US reached a valuation of over $1 billion in 24 hours. However, it is worth noting that there are several other Bitcoin funds in Canada.

In total, seven managers, including Accelerate Financial Technologies, 3iQ, and CI First Asset, offer 23 cryptocurrency exchange traded funds on the Toronto Stock Exchange, some of which are spot Bitcoin ETFs. The combined assets of all these ETFs surpass $5.6 billion.

In Europe, jurisdictions like Sweden, Germany, Switzerland, Jersey, and Liechtenstein cumulatively offer 37 crypto-linked ETFs, boasting a valuation of around $11.4 billion. Similarly, Australia is slated to launch its first physical Bitcoin and Ethereum ETFs in the near future.

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U.S. SEC Skeptical of Spot Bitcoin ETFs

While numerous countries have approved applications of physical Bitcoin ETFs, the U.S. Securities and Exchange Commission (SEC) continues to postpone such applications.

In late September, SEC Chairman Gary Gensler reiterated his support for a Bitcoin futures ETF. “I look forward to staff’s review of such filings,” he said, adding that the so-called ‘40 Act provides “significant investor protection” for mutual funds and ETFs.

By mid-October, the regulatory body approved the first-ever Bitcoin-linked ETF, a fund that tracks the price of BTC “futures” contracts. Since then, the SEC has approved several more Bitcoin futures ETFs. However, investors, particularly retail, are not much excited about these products as they don’t provide direct exposure to Bitcoin.

In fact, experts anticipate that futures ETFs would underperform Bitcoin spot prices by 8%. They have also urged retail to stay away from such products, warning about the risks of significant losses. Noting this, Tyrone Ross, CEO of Onramp Invest, said:

“This [BTC futures ETF] is not something for retail investors to buy, in my opinion. There’s plenty of outlets to buy bitcoin directly. Buying a futures ETF, where the average retail investor does not understand ETFs or futures, which are complicated, is not the best product for retail investors.”

Meanwhile, the SEC has continued to reject physical Bitcoin ETFs. Just recently, the regulatory body denied WisdomTree’s application for a spot Bitcoin ETF. The SEC said in a letter:

“The Commission concludes that BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices’ and ‘to protect investors and the public interest.”

When do you think the SEC might approve an application for a spot Bitcoin ETF? Let us know in the comments below.