Fidelity debuts physically backed bitcoin ETP in Europe

Listed on the Deutsche Börse in Frankfurt and SIX Swiss Exchange in Zurich, the Fidelity Physical Bitcoin ETP will be 100% backed by holdings in the underlying digital coin. The investment vehicle, which is available to professional and institutional investors in Europe, aims to deliver the price performance of Bitcoin, less a fixed 0.75% annual fee.

Bitcoins will be held on behalf of the ETP by Fidelity Digital Assets, a UK-based digital asset custodian, who are registered with the FCA as a crypto asset business under the country’s AML regulations.

Fidelity’s cryptocurrency unit already features institutional-grade, crypto linked services, including custody offerings to safeguard holdings and execution services 24 hours a day, seven days a week.

Fidelity, which has nearly $813 billion in assets under management (AUM), has been trying to structure a product that looked, from an institutional point of view, as close as possible to a traditional ETF. Trading bitcoin through an ETP structure removes the technical challenges associated with cryptocurrency such as setting up a wallet or trading or unregulated exchanges.

70% of institutional investors are reviewing crypto investments

Fidelity Digital Assets, the cryptocurrency arm of Boston-based Fidelity Investments, only serves institutional investors such as hedge funds, family offices and market intermediaries.

“The ETP’s underlying distributed ledger technology has the potential to revolutionise the financial system over time and disrupt many parts of the financial world with profound implications for investors,” said Christian Staub, managing director for Europe at Fidelity.

Initially launched in the US, Fidelity’s crypto arm made the decision to target Europe back in 2019, hiring Chris Tyrer from Barclays to lead operations. The unit is one of the first crypto custody and trading platforms to be launched by an incumbent financial services player.

New research published by Fidelity’s custody and trade execution business shows that 70% of institutional investors and wealth managers now are reviewing investments in cryptocurrencies and digital assets.

The European listings come a few weeks after the US Securities and Exchange Commission denied Fidelity Investments’ application for a long-awaited spot bitcoin exchange-traded fund (ETF).

The agency is yet to approve a bitcoin spot ETF application as it remains concerned about potential fraud and manipulative practices in the cryptocurrency space.

Approval of Fidelity’s proposed ETF, called Wise Origin Bitcoin Trust, would have allowed retail and institutional investors to invest in a regulated financial product without requiring them to invest in the crypto directly. The proposed vehicle would track the world’s oldest cryptocurrency through the Fidelity Bitcoin Index, which takes spot prices from various Bitcoin markets.