There Is Speculation That Fidelity Is Considering Acquiring Grayscale And Submitting An Application For A Bitcoin ETF In The Near Future

According to Andrew Parish, co-founder of Arch Public, there are rumours circulating that Fidelity, the asset management firm, is planning a significant move in the crypto markets. 

Fidelity, which describes itself as “crypto-curious” and has been involved in Bitcoin mining since 2014, launched Fidelity Digital Assets (FDA) in 2018. FDA, which holds a New York Trust Charter and expanded its operations to Europe in 2020, focuses on cryptocurrency-related services.

One notable initiative by FDA is the Fidelity Crypto offering, which allows users to trade Bitcoin and Ethereum alongside traditional stocks. Additionally, Fidelity has been advocating for 401(k) digital asset investing.

These rumours suggest that Fidelity, the third-largest asset manager globally with $4.24 trillion in assets under management, might be contemplating either acquiring Grayscale or submitting an application for a Bitcoin ETF. Parish also speculated that, considering these potential moves and recent developments, both BlackRock and Fidelity could emerge as dominant players in the U.S. digital asset industry.

Grayscale manages a total of 17 cryptocurrency trusts, consisting of both single and multi-asset funds. Among these trusts, the largest in terms of assets under management (AUM) is the Bitcoin Trust (GBTC), which currently stands at $16.5 billion.

Investors who are accredited can gain exposure to the underlying crypto asset(s) through shares in Grayscale trust products. These trusts, similar to ETFs, are subject to reporting requirements mandated by the Securities and Exchange Commission (SEC), which ensures robust investor protection.

However, there is a crucial distinction between a spot Bitcoin ETF and the Grayscale Bitcoin Trust. Unlike the trust, a spot Bitcoin ETF would allow investors to redeem their holdings in BTC directly.

Grayscale has been striving to convert the GBTC into a spot Bitcoin ETF for some time. Unfortunately, their efforts faced a setback when the SEC denied the conversion. In response, Grayscale filed a lawsuit against the SEC in June 2022.

On June 15, BlackRock, the largest asset manager globally, filed an application for a Bitcoin spot ETF.

We did an article on Blackrock’s application here. 

This action was widely regarded as a positive development for the cryptocurrency sector, as it was perceived to have several benefits. It was seen as a potential catalyst for driving up prices, generating a bullish sentiment. 

But could traditional finance entities potentially centralise Bitcoin?

Thus far, the submission of the application was viewed as a step towards legitimising the entire industry.