Fidelity Investment Begins Offering Bitcoin (BTC) ETN
Fidelity Investments has announced that the Bitcoin Tracker One XBT Provider ETN is now available to its customers in the US.
Fidelity Investments has announced that a Bitcoin Exchange-Traded Notes (ETN) is now available to its customers in the US. This gives US investors the opportunity to trade a cryptocurrency exchange-traded product for the first time.
Bitcoin Tracker One XBT Provider ETN (CXBTF:US)
Great news for U.S. investors as the SEC approval now grants investors access to XBT Provider’s Bitcoin ETN product which was formerly only available in the European market.
Investing in the ETN represent an indirect investment in Bitcoin (BTC). What this means is that XBT Provider, the fund issuer, buys and holds the Bitcoin, investors then proceed to purchase them in the form of a Bitcoin ETN share.
The Bitcoin ETN’s shares are listed under the market ticker CXBTF:US on Bloomberg and Bitcoin XBT on the Nasdaq. Trading Bitcoin ETN’s comes with the exposure to the attendant volatility risk famous in the digital asset market.
About Fidelity Investments
U.S. residents can now trade XBT Bitcoin ETN courtesy of the approval granted by the U.S. SEC to the Boston based investment institution Fidelity Investments.
Fidelity is the fourth largest assets manager with $2.4 trillion in assets under its management. The multinational financial services corporation is based in Boston, Massachusetts.
The firm’s first move into cryptocurrencies was announced in June this year when reports emerged that the firm was building a “first-in-class custodian services for Bitcoin and other digital currencies.”
What is an Exchange Traded Note (ETN)?
An Exchange Traded Note is an unsecured debt note issued by an institution. An ETN is backed by a pool of assets owned by the institution offering them, in this case, physical Bitcoin (BTC).
As per the ETN issuer, XBT Provider:
“Bitcoin is purchased for money received through the sale of certificates which ensures that the certificates are hedged and structured to follow the price of bitcoin.The certificates are guaranteed by Global Advisors (Jersey) Limited.”
Barely a week ago, the U.S. Securities and Exchange Commission (SEC) approved Bitcoin Tracker One to operate in the country.
The Bitcoin Tracker One, a Swedish Bitcoin ETN now offers U.S. residents an alternative to buying Bitcoin without actually buying Bitcoin.
With Bitcoin ETN’s, traders can purchase Bitcoins which are owned by institutions in other countries, that way, avoiding the bottlenecks involved in owing the digital asset in the U.S.
While Exchange Traded Notes and Exchange Traded Funds hold some similarities, there has been resistance from the U.S. Securities and Exchange Commission to approve the latter.
Bitcoin ETN, an ETF alternative
While U.S. residents wait for the approval of Bitcoin Exchange Traded Fund (ETF), they have been granted an alternative, Bitcoin ETN, and the XBT Provider refers to this as a “Soft Option”.
By buying XBT’s ETN, investors in the U.S. can now purchase Bitcoin for money. They receive the digital asset through the sale of certificates which ensures that the certificates are hedged.
These certificates are structured to follow the market price of Bitcoin and are guaranteed by Global Advisors (Jersey) Limited.
Also, the Bitcoin ETN is a security, which implies that the investment product will be available to the likes of pension, hedge funds, and other institutional investors. These latter typically have a responsibility to hold 90% of their assets in the form of securities.
Earlier this month, the U.S. SEC took a decision to delay the Bitcoin ETF by VanEck and SolidX until at least September.
While uncertainty clouds the future of Bitcoin ETF’s in the U.S., Bitcoin investors can now trade Bitcoin ETN.