A Fidelity Investments location in New York.
Scott Mlyn | CNBC
Fidelity Investments is preparing to launch its own bitcoin fund while the investment giant works to cement its influence in the digital assets and virtual currency market.
FD Funds Management, a subsidiary of Fidelity, said on Wednesday that it plans to provide financial support for an exchange-traded fund called the Wise Origin Bitcoin Trust.
The company filed a Form S-1 with the Securities and Exchange Commission, a preliminary registration statement for the fund.
Fidelity confirmed that it had submitted a prospectus to sponsor a bitcoin ETF, but said it could not offer further comments due to the preliminary nature of the request.
The ETF will track bitcoin performance as measured by the movement of the Fidelity Bitcoin Index, a barometer that the investment giant has established to track the price of the digital currency.
Although the Trust does not intend to sell bitcoin, it will use the cryptocurrency to pay certain expenses, which, under current IRS guidance, will be treated as a sale of that digital currency.
To be sure, Fidelity’s offer to support a bitcoin ETF is far from its first adventure in the expanding world of digital currencies.
It established Fidelity Digital Assets in 2018, a subsidiary that has since deployed its cryptocurrency custody and trading execution operations. The initial endorsement was sufficient to attract clients ranging from institutional investors such as hedge funds and family offices, according to its chief executive.
Bitcoin, along with thousands of other digital currencies, has seen a spate of purchases in the past 12 months, as an increasing number of investment managers and banks feel comfortable considering it as a potential investment opportunity and a means of replacement.
Although the world’s largest digital asset has struggled in recent weeks, its current price of around $ 52,430 is far above where it was traded a year ago, below $ 10,000, according to Coin Metrics.