In a significant development for the cryptocurrency market, Fidelity International has listed a physical Bitcoin Exchange-Traded Product (ETP) on the London Stock Exchange. This move marks a milestone for professional investors who are looking to gain exposure to Bitcoin through a regulated market segment.
The Fidelity Physical Bitcoin ETP, which is 100% backed by Bitcoin, aims to provide investors with a convenient and cost-effective way to invest in the leading cryptocurrency. The ETP tracks the price movement of Bitcoin and offers a secure way for professional investors to enter the market. This product was initially launched in February 2022 and was listed on the Deutsche Börse Xetra and the SIX Swiss Exchange before making its way to the London Stock Exchange.
The listing follows the Financial Conduct Authority’s (FCA) decision to allow exchanges to create a UK listed market segment for crypto asset-backed Exchange Traded Notes (cETNs), available exclusively for professional investors. This regulatory change reflects the increasing acceptance and demand for digital assets offered through a secure and regulated exchange.
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Bitcoin ETPs provide a straightforward way for investors to add Bitcoin to their portfolios without needing to manage a cryptocurrency wallet or navigate the nuances of cryptocurrency exchanges. These products are typically subject to regulatory oversight, offering a layer of security not always present in the cryptocurrency market. Additionally, the physical Bitcoin backing the ETP is often stored in secure, offline vaults, reducing the risk of hacking.
Bitcoin ETPs are traded on traditional stock exchanges, making them accessible through regular brokerage accounts. This integration into the broader market ensures liquidity, allowing investors to buy and sell shares with ease. Bitcoin, as an asset class, has shown a low correlation with traditional investments like stocks and bonds. Including a Bitcoin ETP in a diversified portfolio can potentially reduce risk and improve returns.
Fidelity Digital Assets? acts as the custodian for the ETP, ensuring the security of the Bitcoin backing the product. In a move to enhance its competitiveness, Fidelity cut the Ongoing Charges Figure (OCF) on the product from 0.75% to 0.35% in February 2024, making it one of the most competitively priced ETPs available to professional investors.
Stefan Kuhn, Head of ETF & Index Distribution, Europe at Fidelity International, commented on the development, stating that the approval of the first spot bitcoin ETFs in the US has spurred interest from investors in cryptocurrencies all over the world. He highlighted that the Fidelity Physical Bitcoin ETP offers an institutional quality solution for professional investors in the UK to enter the market in a familiar, simple, and secure way.
The introduction of the Fidelity Physical Bitcoin ETP to the London Stock Exchange is a testament to the growing institutional interest in cryptocurrencies and the desire for regulated investment vehicles in this asset class. It represents a significant step forward in the integration of digital assets into the traditional financial ecosystem and provides a new avenue for professional investors to diversify their portfolios with cryptocurrency exposure. As the market for digital assets continues to evolve, the listing of products like the Fidelity Physical Bitcoin ETP will likely play a crucial role in shaping the future of investment in this emerging sector.