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Fidelity: Making Progress towards the Bitcoin Spot ETF

Fidelity, a giant asset management company, recently had a key meeting with the American Securities and Exchange Commission (SEC) on December 7th. The purpose of the meeting was to discuss their Bitcoin spot ETF project.

Fidelity: One Step Closer to the Bitcoin Spot ETF

A significant step for Fidelity was the filing of a modified S-1 form for their ETF with the SEC. In this meeting, Fidelity presented a file titled ‘Bitcoin ETF Workflows,’ highlighting ‘In-Kind’ creation and redemption models. According to Fidelity, this system would allow for better efficiency in arbitrage and hedging through physical creations. Market-making firms acting as clearing agencies could thus facilitate efficient arbitrage, which is crucial for improving trading efficiency and market pricing in the secondary market.

Impact on the Market and Regulatory Considerations

This meeting comes at a time when the price of Bitcoin has experienced a significant rise, influenced by market expectations regarding the potential approval of these funds by the SEC. The focus on the technical aspects of the proposed funds and the multiple amendments suggest a thorough examination by regulators and asset managers.

Analysts emphasize the importance of flexibility in the creation/redemption language, which includes both in-kind and cash modalities. However, regulatory approvals may initially limit creations to cash transactions. Additionally, a key disclosure has been highlighted: registered brokerage entities should not directly interact with cryptocurrency in any of the workflows, pointing to a major concern of the SEC.

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