Fidelity Executives Say The Company Has Plans For Numerous Crypto Products – What About Altcoin ETFs?

Cynthia Lo Bessette, head of Fidelity’s Digital Asset Management division, hinted at potential future products including stablecoins, tokenized Treasury bonds and on-chain credit. While she’s pleased with the market’s response to ETFs tracking bitcoin and Ethereum, she’s not convinced about the demand for altcoin ETFs.

“The way we think about our product roadmap is driven primarily by demand from our customer base, as well as how we evaluate the market in terms of its ability to support a new product like this,” Lo Bessette said in a recent interview. “It’s not clear at this point what the next ETP like Solana will be after Bitcoin and Ethereum.”

Lo Bessette’s role at Fidelity involves researching and identifying new investment products for a variety of digital assets. She joined Fidelity five years ago as chief legal officer in its digital asset management division and rose to lead the division.

Fidelity’s Wise Origin Bitcoin Fund is the second-largest exchange-traded product of its kind and is among the top five most-traded ETFs in the U.S. this year. As of July 31, the fund had about $12 billion in assets under management, while the Fidelity Ethereum Fund has raised $259 million since its launch in early July.

“What surprised many of us was that the pace of this demand was absolutely significant,” Lo Bessette said. “Given the overall market cap and the size of Ethereum compared to Bitcoin, asset growth has generally been what we expected.”

Lo Bessette noted that the U.S. Securities and Exchange Commission (SEC) has not yet approved an ETH ETF that can stake underlying assets held in the fund, but that could change in the future. He noted that staking is “a critical component of the Ethereum ecosystem, a critical component of the Ethereum investment opportunity.”

“I think it’s not a matter of if this will happen in any particular time frame, but when,” Lo Bessette added, adding that his team has had “constructive conversations” with SEC staff about potentially bringing the feature to market.

Additionally, Lo Bessette said Fidelity is discussing the possibility of “enhancing the way our products are currently traded” by enabling in-kind payments. All BTC and ETH ETFs currently on the market must be settled in cash.

His team is evaluating whether certain assets should be represented on-chain based on customer demand and the unique opportunities presented by Blockchain technology. Stablecoins are an area where tokenization clearly provides value, suggesting the firm could consider launching its own product:

“Where we look at it and certainly evaluate the projects we see in the market, we think stablecoins definitely have an obvious use case in terms of representing tokenized cash.

“The next evolution from stablecoins is tokenized bond products. After that, we saw a lot of interesting project work in the credit and structured product space, which we are also investigating.”

*This is not investment advice.