Fidelity’s Updated Filing: Key Amendments for Spot Bitcoin ETF

• Fidelity has submitted an updated version of its Spot Bitcoin Exchange-Traded Fund (ETF) prospectus to the SEC.
• Key amendments in the prospectus focus on custodial arrangements, hard forks, valuation, risk disclosure, and mining’s energy consumption.

Fidelity Funds Management LLC has taken a proactive step in the cryptocurrency space by submitting a revised version of its Spot Bitcoin Exchange-Traded Fund (ETF) prospectus to the U.S. Securities and Exchange Commission (SEC). This move highlights Fidelity’s commitment to adapt to the evolving landscape of ETF applications, in line with other major players like Ark Invest and Invesco.

The recent changes in the ETF prospectus underscore several critical areas:

1. Detailed Custodial Arrangements: The manner in which underlying assets, such as Bitcoin, are securely held and managed is a fundamental component of any ETF.
2. Mechanics Around Hard Forks: Addressing how the ETF would handle blockchain hard forks, which can lead to a split in the chain, provides clarity and transparency.
3. Valuation, Pricing Sources, and GAAP Compliance: Establishing a clear framework for valuation and ensuring alignment with Generally Accepted Accounting Principles (GAAP) is crucial for regulatory approval.
4. Risk Disclosure Amid Regulatory Ambiguity: This addition provides investors with insights into potential challenges and uncertainties, allowing them to make informed decisions.
5. Mining’s Energy Consumption: Given the environmental concerns surrounding Bitcoin mining, the SEC seeks to understand the geographic implications of mining and how ETF issuers plan to mitigate negative impacts on Bitcoin’s price.

Positive Sign for the Crypto Market

James Seyffart, an ETF specialist at Bloomberg Intelligence, sees these updates as a positive indication of constructive communication between the SEC and ETF applicants. The common themes in submissions from Fidelity, Ark Invest, and Invesco indicate the SEC’s focus areas for potential approval criteria.

The crypto market is eagerly awaiting a response, with hopes of possible approvals in the first quarter of 2024. Recent rumors about the SEC potentially approving BlackRock’s iShares Spot BTC ETF led to significant market fluctuations, underlining the market’s anticipation for a Spot Bitcoin ETF. The pressure on SEC Chair Gary Gensler has intensified to deliver a definitive verdict.

As this narrative unfolds, Bitcoin’s current price hovers around $28,300, reflecting recent market volatility.