Tag: Fidelity

Investors Flock to US Money Market Funds Amid Banking Crisis

by Blockchain News

As the global banking crisis continues to fuel concerns among investors, the popularity of US money market funds is surging. According to Emerging Portfolio Fund Research (EPFR) data obtained by the Financial Times, more than $286 billion has been invested in these funds so far in March. The inflows are the highest seen in a month since the emergence of the Covid-19 pandemic.

The top beneficiaries of this trend are Goldman Sachs, JPMorgan Chase, and Fidelity. The figures show that Goldman Sachs’ money funds have grown by 13%, receiving $52 billion in investment. JPMorgan’s funds have seen inflows of nearly $46 billion, while Fidelity has enjoyed nearly $37 billion in investment. These funds are offering their best yields in years, as the US Federal Reserve continues to raise interest rates in a bid to curb inflation.

Money market funds are a popular choice for investors during uncertain times because they offer high liquidity and low risk. The current crisis in the banking sector has only served to amplify these qualities. The fear of liquidity constraints and potential bank failures has caused many investors to seek out safer investments, and US money market funds are delivering the kind of stability that investors crave.

In the seven days leading up to March 22, total money market fund assets increased by $117.42 billion to $5.13 trillion, according to a report from the Investment Company Institute. Government funds increased by $131.84 billion, while prime funds decreased by $10.83 billion. Tax-exempt money market funds shrank by $3.61 billion.

The influx of cash into money market funds is driven by fears surrounding the health of the financial system. Banks in the US and Europe are facing liquidity constraints as monetary policy tightens, and investors are wary of the potential risks associated with these developments.

For example, on March 24, shares of Deutsche Bank dropped due to an increase in the cost of insuring against its potential default risk. The bank’s five-year credit default swaps (CDS) climbed 19 basis points from the previous day, closing at 222 bps, according to Reuters, citing S&P Global Market Intelligence data. Meanwhile, in the US, there is still uncertainty surrounding regional banks, as insurance on default for financial services firms Charles Schwab and Capital One soared last week. The latest data shows that credit default swaps jumped over 80% to 103 bps as of March 20.

The surge in popularity of money market funds underscores the ongoing concerns of investors in the face of a global banking crisis. With interest rates continuing to rise, and fears of liquidity constraints and bank failures mounting, it seems likely that this trend will continue in the months ahead.

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Senator Elizabeth Warren Leads Inquiry Into Fidelity’s Bitcoin-Backed Retirement 401(k) Account

by Blockchain News

In the wake of the launch of a Bitcoin-focused 401(k) account- a retirement plan- in the United States by Fidelity Investments, two Senators – Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, have expressed concerns over the company’s latest products and this was contained in a letter to the firm’s Chief Executive Officer, Abigail Johnson.

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As contained in the Senator’s letter, a demand was placed on Abigail to explain some of the inherent risks that are associated with the launch of the Bitcoin-backed product to American workers. The senators demanded that Fidelity clarify the risks involved in the 401(k) investments and how the company will address these risks.

Additionally, the Senators demanded to know how the firm will address the susceptibility of Bitcoin to manipulation as well as “the additional Bitcoin risks identified by DOL, including the challenge for plan participants to make (an) informed investment.”

Fidelity’s push to extend the investment into 401(k) was said to be based on growing demand from employees. Despite the firm clarifying that it will charge no fees for the service, the Senators still demanded to know if the proposed customers would need to worry about any fees at all.

In the prior announcement, Fidelity said it would only permit about 20% of a particular client’s portfolio to be invested in digital currencies, however, the claim of popular demand has mainly been faulted by the Senators who wrote;

“Despite a lack of demand for this option — only 2% of employers expressed interest in adding cryptocurrency to their 401(k) menu – Fidelity has decided to move full speed ahead with supporting Bitcoin investments.”

It is not uncommon to find some Senators expressing dissatisfaction about anything relating to Bitcoin, drawing on the fact that it is a Proof-of-Work (PoW) coin with a high Carbon footprint. With Fidelity’s investment offering now being questioned, time will show whether true organic demands fueled the launch of the product or not.

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Fidelity Offers Bitcoin Portfolio Options to Retirement Investment via MicroStrategy

by Blockchain News

America’s largest retirement savings plans 401(k) provider, Fidelity Investments is set to permit the allocation of some of its client’s funds into Bitcoin (BTC), a move it said was based on popular demand.

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As reported by the New York Times, the permission for subscribers to invest in Bitcoin-backed 401(k) plans is all dependent on whether the sponsors of the scheme favor such moves or not.

401(k) plans are a retirement savings scheme that is sponsored by an employer and supervised by the United States Department of Labor. Fidelity Investments controls over a third of the 401(k) plans in the US with more than $2.4 trillion held in such accounts as of 2020 per data from Cerulli Associates.

While the Department of Labor has expressed scepticism about the Bitcoin-hinged product, Fidelity said its move addresses some of the concerns of the regulator, including the room for employers to choose whether to subscribe to the fund or not. 

Despite these allowances granted to employers who will also determine the maximum allocation that can be injected into BTC, Fidelity said its defined limit will be pegged at 20% of the total funds from any individual 401(k) contributor. As of the time of writing, Bitcoin-savvy MicroStrategy has already been onboarded into the scheme according to Dave Gray, head of workplace retirement offerings and platforms at Fidelity Investments.

“We started to hear a growing interest from plan sponsors, organically, as to how could Bitcoin or how could digital assets be offered in a retirement plan,” he said.

The move from Fidelity complements efforts by American asset management firms to float a crypto-linked product that can be subscribed to by the broader public. Fidelity has done its best to float a Bitcoin spot Exchange Traded Fund (ETF) product, however, continuous rejection of such application from the US SEC has stalled its progress in this regard. The Bitcoin-linked 401(k) plan will serve as one of the viable alternatives for the asset manager in the meantime.

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Fidelity Launches Two ETFs Tracking Metaverse and Crypto Sectors

by Blockchain News

Fidelity Investments Inc., a multinational financial services corporation based in Boston, announced Tuesday the launch of two new thematic exchange-traded funds (ETFs) – Fidelity Crypto Industry and Digital Payments ETF (FDIG) and Fidelity Metaverse ETF (FMET).

The two ETFs will track and reflect the performance of companies exposed to the metaverse and cryptocurrency sectors.

Fidelity Crypto Industry and Digital Payments ETF will not provide direct exposure to cryptocurrency. Still, they will allow investors to invest in companies that support the broader digital assets ecosystem, including those involved in crypto trading, mining and digital payments processing, and blockchain technology.

On the other hand, Fidelity Metaverse ETF will allow investors to invest in the evolution and future of the internet by providing them with access to invest in companies that develop, manufacture, distribute, or sell products or services related to establishing and enabling the metaverse, like computing hardware and components, digital infrastructure, design and engineering software, gaming technology and software, web development and content services, and smartphone and wearable technology.

Greg Friedman, Fidelity’s Head of ETF Management and Strategy, talked about the development and said: “Leveraging Fidelity’s decades of investment expertise, we are focused on growing our broad product lineup with innovative strategies that offer choice, value and new opportunities to investors. We continue to see demand, particularly from young investors, for access to the rapidly growing industries in the digital ecosystem, and these two thematic ETFs offer investors exposure in a familiar investment vehicle.” Fidelity stated that the new funds will be available on or around April 21.

Providing Investors Access to Investing in Digital Assets

Fidelity Investments launched its crypto-dedicated subsidiary, Fidelity Digital Assets, in October 2018 with the aim of offering crypto services to its institutional and sophisticated investors. Since then, Fidelity has continued to dive deeper into the crypto space than previously imagined.

Last July, Fidelity expanded the headcounts of its digital assets team as cryptocurrencies were witnessing a series of financial advisers, family offices and other investors get on board. Fidelity, which provides institutional services like digital coin custody to trade execution, wanted to expand its digital asset employees by 70% by the end of that year. The hiring spree came after the firm filed paperwork to the U.S. Securities and Exchange Commission (SEC) to launch a Bitcoin investment fund in March.

Established in 1946, Fidelity Investments Inc is a U.S. multinational financial services corporation based in Boston. The firm is the world’s fourth-largest asset management company with $4.5 trillion in assets under management and assets under administration of $11.8 trillion, as of December 2021.

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Fidelity Digital Assets: Bitcoin Is Superior Money

by CryptoPotato

Fidelity Digital Assets (FDA), the digital asset arm of leading asset manager Fidelity Investments, said in its report that Bitcoin is a superior form of money compared to other digital currencies.

New Investors Should Consider Bitcoin

In a 26-page report published by the digital asset arm of Fidelity, new investors seeking to gain exposure to cryptocurrencies need to consider Bitcoin separately from other digital currencies.

“Other non-bitcoin projects should be evaluated from a different perspective than bitcoin,” the report read.

FDA noted that while bitcoin cannot be considered a better payment method, the asset has proven to be a monetary good and a store of value for investors over the years.

With Bitcoin fundamentally different from other cryptocurrencies, FDA said no existing digital asset project can successfully improve on it as a monetary good.

The company stated that any form of improvement on Bitcoin as a monetary good would face tradeoffs because BTC is the most decentralized, secure, scalable, and sound digital money.

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Bitcoin Luring Traditional Investors

Aside from Fidelity urging new crypto entrants to consider Bitcoin as a monetary good, the company said the leading cryptocurrency should be seen as an entry point for traditional financial investors seeking to gain exposure to digital assets.

Meanwhile, Fidelity Investments is one of the crypto-related companies seeking to onboard traditional investors into the market.

In November, Fidelity launched a spot Bitcoin exchange-traded fund (ETF) in Canada. The multinational financial services firm also announced last month that it would be allocating a small percentage of its Bitcoin ETF to two of its largest funds.

Bitcoin Mainstream Adoption Surges

In recent times, interest in Bitcoin has surged tremendously, with investors, including institutional and corporate clients, seeking to gain exposure to the asset class as a hedge against inflation.

Bitcoin’s outstanding features as a store of value have also prompted the cryptocurrency to be adopted in major cities and countries.

Recall that El Salvador made a ground entrance into the cryptosphere last year by adopting bitcoin as a legal tender. The development prompted the country to purchase BTC on several occasions.

Similarly, Miami also announced several Bitcoin-related initiatives for the city, including converting 1% of the city’s treasury to bitcoin, paying workers’ salaries using the cryptocurrency, as well as accepting taxes in BTC.

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Fidelity seeks approval for 2 more crypto-metaverse ETFs

by Cointelegraph

Fidelity Investments appeared undeterred by the U.S. Securities and Exchange Commission’s, or SEC’s, rejection of its Wise Origin Bitcoin Trust spot ETF on Thursday. Following the setback, the company filed two more prospectuses involving crypto-metaverse ETFs for regulatory approval. The proposals are titled are the Fidelity Crypto Industry and Digital Payments ETF and the Fidelity Metaverse ETF respectively. In rejecting the Wise Origin Bitcoin ETF, the SEC cited the exchange listing the ETF, the Cboe BZX, does not have a proper “surveillance-sharing agreement with markets trading” to prevent fraud and protect investor interests.

However, neither of the two new ETF applications submitted on the same day will have any exposure to digital assets. Instead, they seek to gain exposure to stocks of cryptocurrency and metaverse companies operating in the space. Additionally, the constituent companies must generate substantial revenue for their shares to be added to the fund.

For the Fidelity Metaverse ETF, sectors under consideration are computing hardware and components, digital infrastructure, design, engineering software, gaming technology, web/content developers, and smartphone and wearable technology. As for the Crypto Industry and Digital Payments ETF, it will invest in companies operating in cryptocurrency mining, cryptocurrency trading, crypto exchanges, blockchain tech firms, and digital payments processors. In total, there are over 40 digital currency ETFs awaiting a decision outcome from the SEC submitted from a variety of financial entities in the industry. The prior month, Fidelity officially gained regulatory approval in Canada to launch a Bitcoin ETF and Bitcoin Mutual Fund.