Coinbase’s recent pushback on the U.S. SEC for a lending product goes to show that the cryptocurrency industry and regulators have been at odds lately. Blockchain startups are looking for a clearer regulatory framework by which to operate but have been left disappointed to navigate the waters themselves with the looming threat of the regulatory hammer coming down on them.
Numerous attempts at a bitcoin ETF have been rebuffed. Now one institutional investor powerhouse is looking to use its influence to move tech innovation forward. Fidelity Investments went behind virtual doors to convince the SEC to clear the path for a bitcoin ETF, touting the benefits that the product brings to the table.
Pros and Cons
Among the participants in the virtual meeting on Sept. 8 was Fidelity Digital Assets President Tom Jessop. He touted demand for a bitcoin ETF among investors, the rise of crypto adoption and soaring trading volumes as evidence that the market is ready.
Fidelity executives also addressed the elephant in the room — the nurturing of tech innovation overseas. The SEC has multiple bitcoin ETF applications on its desk currently but has yet to accept any of them.
SEC Chairman Gary Gensler has hinted at entertaining a bitcoin ETF under certain conditions. Under Gensler, any bitcoin ETF would be subject to the strictest of regulatory oversight based on mutual fund rules. The companies behind the bitcoin ETF applications, however, are seeking greater flexibility.
The SEC chief might also consider a bitcoin futures-fueled ETF. Fidelity argues, however, that the bitcoin market is mature enough so that investors can handle direct exposure to the flagship cryptocurrency through products based on the Securities Act of 1933, according to the marketing material from the meeting.
No Stranger to Bitcoin
Fidelity is no stranger to cryptocurrencies. Abby Johnson, Fidelity CEO, has been mining cryptocurrencies since bitcoin was trading below $5,000 and Ethereum was trading for a few hundred dollars. Now with the bitcoin price knocking on the door of $50,000 and Ethereum barreling for $4,000, Fidelity is likely generating profits hand over fist from its crypto mining operations.
Fidelity also filed with regulators for a bitcoin ETP in March. Similar products have already been approved in other countries, including Germany, Canada, Switzerland and Sweden.