The Canadian subsidiary of Fidelity Investments is preparing to launch an ETF that would invest directly in Bitcoin.
Bitcoin ETF Fidelity Advantage (FBTC), which carries a 40 basis point management fee, will primarily invest in Bitcoin directly, according to a prospectus published Nov. 1. 22. You may also purchase derivatives that provide economic exposure to bitcoin, but any use of derivatives will be “incidental” to the ETF’s primary investment strategy, the document adds.
The fund is expected to launch “around” Thursday, a fidelity spokesperson told blockworks, and will be listed on the toronto stock exchange.
fidelity began blockchain technology research and development efforts in 2014 through the fidelity center for applied technology.
“We believe that cryptocurrency is a valid asset class that we would like to offer as an investment option for retail investors in Canada by including it in our product offering,” the spokesperson said. “As for why now, we wanted to offer an end-to-end loyalty solution with a strong regulatory foundation.”
The ETF’s custodian, Fidelity Clearing Canada, recently gained approval as the first digital asset custodian to be regulated by the Investment Industry Regulatory Organization of Canada (IIROC). The fund’s bitcoin sub-custodian will be fidelity digital assets, which is the custodian of fidelity’s sage source bitcoin index fund, a limited partnership launched last year that is available to qualified investors in the united states.
Bloomberg Intelligence ETF analysts Eric Balchunas and James Seyffart highlighted the upcoming ETF launch in Twitter posts this week.
balchunas noted that fidelity “will easily be the largest asset manager to date with a bitcoin etf,” while seyffart called the impending launch “big sneaky news.”
Fidelity’s total discretionary assets totaled nearly $4.3 trillion at the end of September, while its assets under management were $11.1 trillion. The parent company of the loyalty advantage bitcoin issuer ETF reported that it had about 31 million retail accounts at the end of the third quarter.
Purpose Investments launched Canada’s first Bitcoin ETF, the Purpose Bitcoin ETF (BTCC), in February, with the offering exceeding $1 billion (CAD) in assets under management within its first month of operations.
“While I think some institutional money will certainly go on the sidelines due to the strength of fidelity’s heavyweight brand, I’m not so sure it will actually take much out of existing mutual fund assets,” said lara crigger, editorial director of etf trends. “History has shown us time and time again that pioneer status is profoundly powerful marketing.”
purpose’s btcc now has $1.8 billion (CAD) in assets under management. The Evolve Bitcoin ETF (EBIT), which launched a day later, has about $200 million (CAD) in assets.
Fidelity’s new physically-backed bitcoin ETF is the latest to launch globally, while the US Securities and Exchange Commission. uu. (sec) has not yet approved such a product.
The agency rejected fund group Vaneck’s proposal for a spot bitcoin ETF earlier this month. fidelity applied with the sec to launch a bitcoin trust in the united states in march.
The growing number of bitcoin ETFs in Canada is not likely to prompt US regulators to change their stance or speed up their timeline, Crigger told Blockworks.
“I know hope is eternal, but the sec has been pretty adamant that futures-based etfs, and bitcoin futures specifically, are the first and only crypto instrument they’re comfortable with” , said. “I can’t see that changing anytime soon.”
Canada’s Crypto ETF Landscape Expands
purpose expanded its crypto offerings after the launch of btcc, adding purpose ether etf (ethh) in April. Added three more products this week: Purpose Bitcoin Yield ETF, Purpose Ether Yield ETF, and Purpose Crypto Opportunities ETF.
The Crypto Opportunities ETF, sub-advised by the Canadian business of Neuberger Berman, a company with $437 billion of assets under management at the end of Q3, invests primarily in digital assets and securities that provide exposure to the space.
Yield ETFs invest indirectly in long-term holdings of Bitcoin and Ether primarily through units of the Purpose Bitcoin ETF and the Purpose Ether ETF. In order to generate additional returns and enhance portfolio income, managers may write covered call options and cash covered put options on securities held by the funds, in accordance with the funds’ prospectuses.
the bitcoin yield etf purpose and the ether yield etf purpose seek to provide participants with monthly distributions.
“With these ETFs, we aim to expand the ways investors can access crypto markets and generate the unique returns available in this emerging asset class,” said Som Seif, Founder and CEO of Purpose Investments, in a statement.
As bond yields remain low and income becomes harder to come by, income-generating covered call ETFs have flourished in the US. uu. this year, crigger told blockworks.
The domestically risk-managed etf (nusi) has generated $666 million in assets to date, he noted, while global x’s nasdaq 100 hedged call etf (qyld) has seen inflows of $3.8 billion in so far in 2021.
“Purpose covered call ETFs could serve the same yield-hungry investor, while also serving investors who want an opportunity to participate in cryptocurrency price action,” Crigger explained. “Now, is there a lot of overlap in the Venn diagram of those two investors? I’m not sure it exists.”
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