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Fidelity Set to Join BlackRock in Launching Bitcoin ETF: Has Bitcoin Gone Mainstream in the U.S?

Last Updated June 26, 2023 7:46 AM
Omar Elorfaly
Last Updated June 26, 2023 7:46 AM

Key Takeaways

  • Fidelity, an asset management firm with over $4 trillion under its management, might be making big moves on Bitcoin
  • An even bigger firm, Blackrock, has already applied for a Bitcoin spot trading ETF
  • Stakeholders are not happy about the world’s wealthiest taking over a market that was meant to be decentralized

Crypto expert, Andrew Parish raised a flag  concerning Fidelity, the world’s third-largest asset management making moves on the Bitcoin trading market. Parish predicts that Fidelity is either going to apply for their own Bitcoin ETF and/or move to take over Grayscale — Grayscale  runs 17 cryptocurrency trusts, including single and multi-asset funds. 

Fidelity is one of two giant asset management firms potentially making moves in the Bitcoin trading space. The other company is Blackrock, the world’s biggest asset management firm, with an asset portfolio of over $9 trillion. 

Blackrock, which owns major stakes in prominent brands like Spotify and Uber, has applied for a Bitcoin spot trading ETF. Blackrock’s ETF application is yet to be approved by the regulating committee. However, only one  of Blackrock’s 576 ETF applications has ever been denied before. That one denied request was because the company was insufficiently transparent regarding its business goals for said ETF.

Understandably, the crypto (namely Bitcoin) community is not excited about corporations that already controlled fiat currencies potentially taking control of the Bitcoin market. But, technology and regulations might just be paving the way for that transformation.

Who Is Fidelity?

Fidelity was established in 1946, under the management of FMR, which is a company owned and run by the Johnson Family, one of the US’s richest families. The company manages assets that are worth over $10 trillion starting December 2022. 

The company’s description depicts it as “crypto curious” since it experimented with mining Bitcoin back in 2014. More recently, Fidelity launched a crypto-only arm, called Fidelity Digital Assets, or FDA for short. Ever since FDA received New York Trust Charter and launched its European operations in 2020.

The company Fidelity may take over, Grayscale, offers the option to investors to invest in crypto assets by buying shares in its trust. Grayscale has also been trying to convert its Bitcoin Trust (GBTC) to a spot Bitcoin ETF for years, but the SEC has been in the way the whole time. It got to the point where Grayscale actually sued SEC over the matter. 

An Even Bigger Shark In The Water

Learning that Fidelity is potentially making moves on the crypto market is alarming enough for stakeholders. But, knowing that Blackrock has already applied for a spot Bitcoin ETF spells near certainty that the Bitcoin market is about to witness a huge balance shift

Long story short, Blackrock is the world’s biggest asset management firm. Needless to say, a company that owns more assets than any other organization entering the crypto space will not only influence the prices and availability of Bitcoin but also cause a power shift in the market, effectively controlling market prices. 

Blackrock’s application noted that the company will be using Coinbase as its crypto custodian. In 2019, Coinbase acquired Xapo, an institutional-scale crypto custody tool.

Considering Coinbase is currently facing a lawsuit filed by the SEC, alleging that the crypto exchange traded in “unregistered securities”, some worry that the SEC might take Coinbase out of the picture, leaving Blackrock to freely takeover Xapo.

Bitcoin Stakeholders React Differently

Logically, knowing that a major corporation might start buying Bitcoin in large sums would result in the market hiking up the price of Bitcoin. That all sounds well and good for some Bitcoin holders who look forward to their possessions gaining higher values. However, many, if not the majority of, Bitcoin holders, enthusiasts saw Bitcoin (and altcoins) as a way out of the fiat market that is strictly controlled by the richest corporation and politicians. 

For that very reason, the crypto community is divided into two factions:- First are those who welcome Blackrock and Fidelity, waiting for their Bitcoins to get pricier, hence increasing their personal wealth. The other faction is made up of ones who fear for the future of crypto, seeing that Blackrock and Fidelity signal an omen of the end of a decentralized market, once again controlled by a handful of powerful individuals.