Fidelity Investments has raised $5 million for its new Ethereum Index Fund, which offers clients exposure to Ethereum. The fund launched on September 26 and has a minimum investment of $50,000. Fidelity Digital Assets, the firm’s crypto-focused institutional custody, and trading platform, were established in 2018.
Ethereum has emerged as a leading platform for decentralized applications and smart contracts. The launch of Fidelity’s Ethereum Index Fund provides investors with another way to gain exposure to this growing asset class.
This fund is available for registered accounts, such as The Registered Retirement Savings Plan (RRSP) and the Tax-Free Savings Account (TFSA), which allows investors to add exposure to Ethereum to their portfolio with a regulated product.
This development by Fidelity is significant because Ethereum is not a regulated financial product. Many investors are compelled by law to invest only in regulated instruments and thus cannot directly add spot Ethereum to their portfolio. ETF funds enable anybody to invest in licensed financial products and take positions in unregulated assets.
A Growing Demand For Crypto Exposure
The launch of the ETH-based index fund comes less than two years after the launching a similar Bitcoin fund. The Wise Origin Bitcoin Index Fund is a passively managed vehicle sold to qualified investors through the Fidelity Digital Funds subsidiary. The Securities and Exchange Commission (SEC) records show that 83 investors pooled their money – at a minimum of $50,000 each – for a combined raise of $102 million in the first year of its launch.
Like the Bitcoin fund, the minimum investment for this fund is $50,000, which prices out most retail investors. It has been made available exclusively to accredited investors. The Fidelity Index Committee will review the Fidelity Ethereum Index every six months for updates. The Fidelity Advantage Ether ETF does not aim to speculate on short-term changes in Ethereum price but aims to invest in the long term.
Regardless of the long-term investment thesis, Fidelity warns investors on the new fund’s page with the following statement:
“Given the speculative nature of ether and the volatility of the ether market, there is considerable risk that these funds will not be able to meet their investment objectives. An investment in these funds is not intended as a complete investment program. It is appropriate only for investors who can absorb a loss of some or all of their investment. An investment in these funds is considered high risk.”
Fidelity Leads The Way
Fidelity Investments is one of the largest asset managers in the industry, with a total of $4.5 trillion in assets under management. Since 2018, it has been exploring crypto markets through its Fidelity Digital Assets subsidiary to remain at the cutting edge for its investors.
Fidelity’s most significant advantage over its competition is that it can provide direct token custody, which is difficult to do securely. This lets Fidelity satisfy the demands of investors who want to speculate on cryptocurrency prices without hassle with secure control.
Fidelity is responding to the high demand in the market for a diverse set of products and solutions that help clients gain exposure to cryptocurrencies that fit their goals and risk tolerance. They also observed an increase in demand for digital assets other than Bitcoin. The new Ethereum fund is the first step to exposing investors to crypto beyond Bitcoin.