Fidelity investments files for metaverse ETF following rejection of its spot Bitcoin ETF application

  • The fourth-largest fund manager in the US, Fidelity Investments, has now filed for a metaverse ETF with the SEC.
  • The firm’s spot Bitcoin ETF was rejected alongside others with the regulator citing concerns of fraud, manipulation, and investor protection.

After the US SEC (Securities and Exchange Commission) turned down Fidelity Investment’s spot Bitcoin ETF (exchange-traded fund) on Thursday, the giant asset manager went ahead to make another blockchain-related ETF application. 

According to a Jan. 27 filing, the firm now seeks approval for a metaverse ETF. Dubbed the Fidelity Metaverse Index, the product would track companies that “develop, manufacture, distribute, or sell products or services related to establishing and enabling the Metaverse,” per the application.

Fidelity Investments is the fourth largest fund manager in the world, with $8 trillion worth of assets under management (AUM). Its interest and possible future entry into the metaverse space through an ETF would largely validate the new technology. The move will also likely pull other players to engage with the blockchain-based 3D virtual reality network.

As noted in the preliminary prospectus, Fidelity plans to invest in the stock of companies in the Fidelity index. Firms included in the index will be those engaged in activities related to “cryptocurrency, blockchain, and digital payments processing.”

Fidelity wants in on Metaverse ETF

Of note, Fidelity’s application isn’t the only one pending on the regulator’s inventory. ProShares, well known for the first Bitcoin futures ETF, filed for a metaverse-focused ETF with the SEC on Dec. 21. Just like Fidelity’s, the offering reflects the performance of several companies offering metaverse-related services. It includes the top-ranking stocks of Apple, Meta, and Nvidia in what is known as the “ProShares Metaverse Theme ETF”.

Roundhill Investments was the first to get approval for such a product in the US in June last year. The ETF tracks about 44 holdings with roughly $950 million in AUM. Another is the Font Metaverse ETF which has $13.5 million AUM. Canada boasts of two such products – Evolve Metaverse ETF and Horizons Global Metaverse Index ETF. South Korea, on the other hand, approved four such products at the same time in October last year.

SEC remains stubborn on spot Bitcoin ETF

Fidelity’s filing for a metaverse ETF happened on the same day its spot Bitcoin ETF was rejected. As it happens, the US regulator is still adamant about denying the legalization of such an offering. It cites risks of fraud, market manipulation, and investor losses. Last week, the watchdog rejected spot Bitcoin ETF applications from First Trust and Skybridge Capital, citing similar reasons.

The metaverse has continued to receive immense attention just as it has drawn criticism to itself. Apple, the largest company in the world by a $2.6T valuation, has now announced its intent on investing in space. Other tech players such as Meta and Microsoft have much more advanced developments in the metaverse.

Related: Apple stock up 8% following announcement on intent to join the metaverse

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