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Fidelity Eyes Grayscale Buyout and Bitcoin ETF Bid

Fidelity’s Rumored Strategic Advances in Cryptocurrency

Rumors are circulating about Fidelity, the asset management firm, making significant moves in the crypto markets, according to Andrew Parish, co-founder of Arch Public.

Fidelity, considered “crypto-curious” and actively involved in Bitcoin mining since 2014, launched Fidelity Digital Assets (FDA) in 2018. FDA, holding a New York Trust Charter and expanding operations to Europe in 2020, focuses on cryptocurrency-related services.

Notable initiatives by FDA include the Fidelity Crypto offering, allowing users to trade Bitcoin and Ethereum alongside traditional stocks, and advocating for 401(k) digital asset investing.

Speculations suggest that Fidelity, the third-largest global asset manager with $4.24 trillion in assets under management, might be considering acquiring Grayscale or applying for a Bitcoin ETF. Parish speculates that both BlackRock and Fidelity could emerge as dominant players in the U.S. digital asset industry.

Grayscale manages 17 cryptocurrency trusts, with the Bitcoin Trust (GBTC) being the largest, holding $16.5 billion AUM. Accredited investors can gain exposure to underlying crypto assets through Grayscale trust products, subject to SEC reporting requirements for investor protection.

However, there’s a crucial distinction between a spot Bitcoin ETF and the Grayscale Bitcoin Trust. Unlike the trust, a spot Bitcoin ETF would allow direct redemption of holdings in BTC.

Grayscale has been attempting to convert GBTC into a spot Bitcoin ETF, facing setbacks when the SEC denied the conversion. In response, Grayscale filed a lawsuit against the SEC in June 2022.

Grayscale logo infront of bitcoin

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

We covered Blackrock’s application here.

This move was seen as positive for the cryptocurrency sector, potentially acting as a catalyst for price increases and generating bullish sentiment.

The submission of the application was perceived as a step toward legitimizing the entire industry.

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