Institutional Investors’ Bitcoin ETF Appetite Grows, While SEC still Stalling on Approvals

Bitcoin gold coins in a close-up shot, digital currency concept.
24K-Production / Getty Images

The pandemic and the market turmoil have triggered a switch in digital asset perception for institutional investors and 2020 represented a catalyst for many of them, according to a new survey.

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The Fidelity Digital Assets 2021 Institutional Investor Digital Assets Study, finds that for 44% of investors surveyed, it increased their likelihood of investing in digital assets and for 40%, it had no impact.

In addition, for the second year in a row, the survey found that European investors have a more progressive view toward digital assets than Americans when comparing the responses across all categories. Even so, Asian investors, who we surveyed for the first time this past year, are by far the most accepting of digital assets, with more than 70% of investors surveyed currently invested in digital assets.

When asked how they would likely invest in the future, 30% of U.S. respondents said they would prefer to buy an investment product, compared to 18% in the previous year, potentially signaling investor hopefulness that a digital asset ETF will be approved by regulators, according to the survey.

“One may expect this trend to continue as more public and private investment products containing digital assets become available to U.S. investors.”

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Indeed, the Securities and Exchange Commission has been stalling on approving crypto ETFs. Investors and investment managers have anxiously been awaiting a decision from the Commission on the approval of Bitcoin ETFs, which would have to be traded on the “exchange” — in other words, on the stock market (and therefore, only during the hours the stock market is open). Right now, cryptos don’t have any such limitations and can be traded anytime.

While several companies have filed crypto ETFs with the SEC, the Commission has either rejected or delayed its decisions on many of them. VanEck, for example, registered its ETF in March, and the SEC usually takes 45 days to approve or disapprove a filing. The Commission has issued several notices to extend the review period. Just last week, the SEC said it intends to take an additional 60 days to review the proposed rule change and “accordingly, designates November 14, 2021, as the date by which the Commission shall either approve or disapprove the proposed rule change.”

Fidelity also filed a Bitcoin ETF in April, the Wise Origin Bitcoin Trust ETF, which will track Bitcoin performance as measured by the performance of the Fidelity Bitcoin Index PR, according to the SEC filing. The filing notes that FD Funds Management is the sponsor of the fund, and Fidelity Digital Asset Services — Fidelity’s digital arm — is its custodian.

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The survey also notes that 62% of U.S. investors expressed a neutral-to-positive view about a potential bitcoin ETF.

A regulatory structure for exchange-traded products holding bitcoin exists in Europe and Asia and, not surprisingly, these products remain appealing to surveyed investors in these markets – only 33% of European and 22% of Asian investors found a bitcoin ETF unappealing,” according to the survey.

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About the Author

Yaël Bizouati-Kennedy is a former full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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