Fidelity bucks crypto bear market with ethereum index fund launch


Never mind the crypto bear market. Fidelity Investments is launching the Fidelity Ethereum Index Fund, according to a 4 Octoberfiling with the Securities and Exchange Commission. The fund currently has $5m in assets.

We have continued to see client demand for exposure to digital assets beyond bitcoin, a Fidelity spokesperson said in an emailed statement to Barrons Advisor, a fellow Dow Jones Group title.

The fund is part of theFidelity Digital Assetsdivision, which was formed in 2018 to provide custody and trading services for crypto investments. Through this platform, Fidelity launched the Wise Origin Bitcoin Index Fund I in 2020.

Like its older cousin, the Fidelity Ethereum Index Fund is available to accredited investors and the minimum investment is $50,000. This is not an exchange-traded fund. Rather, it is structured as a traditional limited partnership and investment purchases are made through a private placement.

The benchmark for the fund is the Fidelity Ethereum Index PR. It is constructed using Ethereum price feeds from approved exchanges and reflects the performance of the cryptocurrency in US dollars. The index uses a volume-weighted median price method based on five-minute increments to determine the ethereum price composite.

READFidelitys crypto unit revenue surges buthiring boom adds to costs

The cryptocurrency for Ethereum is called ether or ETH. Its the second largest behind Bitcoin and the market value is roughly $160bn. A key attraction for Ethereum is the ability to create smart contracts. This is software to build applications, games, and NFTs (non-fungible tokens).

Last month, the Ethereum network underwent a major upgrade, which was called The Merge. This is expected to result in improved security and much lower electricity usage.

However, this year ether has suffered major losses along with many other crypto assets. Its off about 63%, trading on 5 October at $1,355, down from $3,768 at the start of the year.

Fidelity has been quite active in the crypto market, especially in comparison to many financial services firms. In April, Fidelity announced that it wasrolling out bitcoin offerings for 401(k) plans.

In addition, Fidelity has partnered with Citadel Securities,Virtu FinancialandCharles Schwabtobuild a cryptocurrency trading platform. The system is expected to launch later this year or early 2023.

As the marketplace for digital assets grows, Fidelity recognises the need for a diverse set of products and solutions that help customers gain exposure in a manner that aligns with their distinct financial objectives and risk tolerance, a Fidelity spokesperson said.

This article was published by Barron’s, a fellow Dow Jones Group title