Fidelity Wise Origin Bitcoin Fund (FBTC): A Complete Explainer for 2025

Greg Ostrot
Oct 13
9 min read

Updated: Oct 17

What Fidelity Wise Origin Bitcoin Fund (FBTC) is

FBTC is an exchange-traded product that seeks to track the performance of bitcoin in U.S. dollars using the Fidelity Bitcoin Reference Rate (the “Index”), adjusted for the fund’s expenses and liabilities. Shares trade on the Cboe BZX Exchange under the ticker FBTC. Investors buy and sell shares through brokers on the secondary market and may trade at a premium or discount to NAV during the day.

The offering is a continuous offering registered under the Securities Act of 1933. FBTC is not registered under the Investment Company Act of 1940, the sponsor is not an investment adviser under the Advisers Act, and the product is not a commodity pool regulated by the CFTC. Accordingly, investors do not receive those regimes’ protections.

Investment objective and index methodology of FBTC

Objective. Track the price of Bitcoin as measured by the Fidelity Bitcoin Reference Rate, less expenses and other liabilities. The trust holds actual bitcoin to achieve this objective.

Index construction. The Index aggregates price feeds from eligible spot Bitcoin markets and applies a volume-weighted median price (VWMP) methodology. It is calculated every 15 seconds using VWMP data over rolling 60-minute windows to smooth out short-term noise and outliers.

Index governance. Fidelity Product Services LLC, an affiliate of the sponsor, oversees the Index. Coin Metrics, Inc. serves as independent calculation agent.

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Structure and key parties

Sponsor: FD Funds Management LLC. Manages and controls the trust under the Trust Agreement and receives the Sponsor Fee.
Trustee: CSC Delaware Trust Company. The trust is a Delaware statutory trust formed in 2021; the name was amended in October 2023 to “Fidelity Wise Origin Bitcoin Fund.”
Custodian (Bitcoin): Fidelity Digital Asset Services, LLC (FDAS). Holds all bitcoin for the trust in segregated accounts on its books.
Cash Custodian: State Street Bank and Trust Company. Safekeeps cash and non-Bitcoin assets.
Transfer Agent: State Street Bank and Trust Company. Facilitates issuance/redemption settlements with Authorized Participants and maintains shareholder accounts.
Distributor: Fidelity Distributors Company LLC. Reviews marketing materials for regulatory compliance.

How shares are created and redeemed from FBTC

Basket size. FBTC issues and redeems shares only in blocks of 25,000 shares called “Baskets.”

Who interacts with the trust. Only Authorized Participants (APs)—typically broker-dealers and DTC participants—may place creation or redemption orders directly with the trust.

Cash model in effect. As of the prospectus date, the trust creates and redeems shares in exchange for cash only. In-kind (Bitcoin) creations/redemptions would require additional regulatory approvals and listing rule changes; there is no guarantee or defined timeline.

Basket deposit amounts.

The Basket Bitcoin Deposit equals the trust’s bitcoin per share (net of accrued fees/expenses) multiplied by 25,000 shares, ignoring fractional satoshis below 0.00000001.
The Basket Cash Deposit equals the same pro-rata value in cash, plus any applicable transaction fees.

Timing and cut-offs. Orders reference the 4:00 p.m. Eastern Index price for NAV determination, with cut-off times set by the sponsor; APs bear slippage if executions differ from the Index print.

Redemptions. Upon redemption, the trust delivers either bitcoin in kind (if ever permitted) or cash proceeds from the sale of bitcoin, with settlement mechanics handled by the transfer agent and cash custodian. The sponsor may reject orders not in proper form.

Suspensions. The sponsor may suspend creations/redemptions during market disruption or operational issues. Such suspensions can widen premiums/discounts.

AP transaction fees. APs pay transaction fees covering operational processing, brokerage, transfer, network and stamp taxes; the sponsor may change these fees. APs are responsible for any taxes on basket activity.

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Pricing, NAV, and secondary-market trading

FBTC calculates NAV using the Index methodology and values shares daily. During the trading day, shares may trade at a premium or discount relative to NAV. Most investors transact on the exchange and pay standard brokerage commissions. Shares settle and transfer through DTC in book-entry form.

For financial statement reporting under GAAP, the sponsor intends to source a principal-market, exchange-traded price deemed a Level 1 input under ASC 820, subject to policy determinations by the sponsor.

FBTC Fees and Expenses

Sponsor Fee: 0.25% per year of the trust’s Bitcoin Holdings (trust bitcoin plus other assets represented in bitcoin, less liabilities, all measured using the Index), accrued daily and payable monthly in bitcoin or cash. On-chain fees to pay the Sponsor Fee are borne by the sponsor, not the trust. The sponsor may waive fees at its discretion.

What the Sponsor Fee covers: ordinary course “sponsor-paid expenses,” including third-party provider fees (distributor, administrator, custodian, cash custodian, transfer agent, index provider, trustee), listing and trading-related costs, ordinary legal/audit/regulatory fees, printing/mailing, website, and license fees. There is no cap on sponsor-paid expenses.

Extraordinary expenses: The trust bears non-recurring “extraordinary” items (e.g., litigation, certain taxes, indemnifications, extraordinary legal or regulatory matters). If bitcoin must be sold to pay these, the trust bears related on-chain fees.

Sales to raise cash: If the trust needs cash for expenses or cash redemptions, the sponsor will cause bitcoin transfers/sales in the smallest amounts needed and may use third-party brokers (including affiliates) that meet AML/KYC standards.

Bitcoin custody: cold storage, controls, and key management by FBTC

Segregation and omnibus wallets. The trust’s bitcoin is held in a segregated account in the trust’s name on the custodian’s books, within omnibus wallets alongside other FDAS clients; coins are treated as fungible.

Cold vs. hot storage. FDAS represents that it targets keeping a substantial majority of assets in cold storage (generally >98%), with a small balance in hot wallets to facilitate timely withdrawals and redemptions. The allocation can change based on risk analysis and liquidity needs, and the sponsor does not control the split.

Physical security and procedures.

Multiple, redundant cold-storage sites with 24/7 on-site security, video surveillance, alarms, hardened room structures, and multi-person, multi-team, multi-factor access controls. Locations are confidential.
Key generation ceremonies on offline devices that have never been network-connected; segregation of duties, witnessed processes, validation and sign-off.
Key shards and backups stored across separate locations; multiple locations required to reconstruct a key.
Transaction signing uses private keys protected by strict physical, cyber, and operational controls; transfers from cold to hot require enforced approvals and integrity checks, with private keys never leaving secure devices or facilities.

Client access controls. Authorization measures may include usernames/passwords, two-step verification, and call-backs to validate sponsor instructions. Transfers to the trust’s account are available once processed on-chain and after custodian checks.

Forks and airdrops. FDAS decides which chain(s) it supports. The sponsor will disclaim or claim forked/airdropped assets case-by-case and must approve custodian actions to claim them.

Cash handling and conversion policy

The trust does not intend to hold material cash balances except when receiving AP cash for creations, holding cash for redemptions, or paying expenses.

Cash is held at the Cash Custodian and is converted to bitcoin as soon as practicable, except where needed for redemptions/expenses.

Trading counterparties (for bitcoin purchases and sales)

As of July 1, 2025, the trust has agreements with A1, Ltd.; Cumberland DRW LLC; Flow Traders B.V.; Galaxy Digital Trading Cayman LLC; JSCT, LLC (Jane Street affiliate); Virtu Financial Singapore Pte. Ltd. (Virtu affiliate); and Wintermute Trading Ltd to serve as bitcoin trading counterparties. These parties are subject to applicable licensing and maintain AML/KYC practices. (Counterparty lists may change.)

Tax considerations (U.S. federal income tax)

FBTC is expected to be treated as a grantor trust for U.S. federal income tax purposes. Shareholders are treated as owning a pro-rata share of the trust’s assets and must include their share of the trust’s income and expenses in taxable income.

Each sale or disposition of bitcoin by the trust—including the use of bitcoin to pay expenses—is a taxable event that can produce gains or losses allocable to shareholders. Consult tax advisers for individual circumstances.

Key risks to understand

Regulatory regime. FBTC is not a 1940 Act fund, the sponsor is not an Advisers Act investment adviser, and the product is not a CFTC-regulated commodity pool. Investor protections differ from mutual funds, advisers, or futures products.
Custody and counterparty risk. Despite robust controls, losses from security breaches, defects, force majeure, or custodian insolvency cannot be ruled out and may reduce share value. The custodian is a New York limited liability trust company supervised by NYDFS, but insolvency could cause loss or delay of access to assets.
Premium/discount risk. Trading can deviate from NAV, especially during volatile markets or if creations/redemptions are suspended.
Market microstructure and AP dynamics. APs are not obligated to create or redeem baskets or to sell shares to the public. AP or affiliate trading in spot markets could affect pricing and arbitrage efficiency.
Operational suspensions. The sponsor can suspend creations/redemptions during disruptions, which can widen tracking differences.
Taxable events. Sales of bitcoin by the trust, including to pay expenses, are taxable to shareholders.

Who FBTC may suit

Investors wanting spot bitcoin exposure via a publicly traded security with standard brokerage access and qualified account eligibility.
Institutions or individuals who require segregated institutional custody and daily NAV with exchange trading and DTC settlement.

Who should be cautious

Investors expecting ’40 Act protections or an investment-adviser fiduciary standard.
Those unable to tolerate bitcoin volatility, premium/discount swings, or tax complexity from grantor-trust pass-through.

How to buy and sell FBTC

Shares trade on Cboe BZX under FBTC throughout regular market hours. Most investors transact on the secondary market via brokers and pay customary commissions. Settlement and transfers occur through DTC.

Fast facts (at a glance)

Ticker / Exchange: FBTC / Cboe BZX.
Objective: Track bitcoin via the Fidelity Bitcoin Reference Rate (VWMP over rolling 60 minutes; calculated every 15 seconds).
Basket size: 25,000 shares.
Creation/redemption: Cash-only as of the prospectus date; in-kind would require approvals.
Sponsor Fee: 0.25% of Bitcoin Holdings; accrued daily, paid monthly; sponsor pays on-chain fees related to the fee.
Custodian (bitcoin): Fidelity Digital Asset Services, LLC. Majority in cold storage; hot wallets used for transfers. Targeting >98% in cold storage, subject to change.
Cash Custodian / Transfer Agent: State Street Bank and Trust Company.
Distributor: Fidelity Distributors Company LLC.
Index oversight / calculation: Fidelity Product Services LLC / Coin Metrics.

Operational mechanics: why the cash model matters

Because FBTC currently creates and redeems for cash, APs submit or receive cash and the trust executes bitcoin trades through approved trading counterparties. When executing a cash creation, if trade prices exceed the 4:00 p.m. Eastern Index price used for NAV, the AP bears the shortfall; similar mechanics apply with redemptions. This design anchors secondary-market pricing to NAV through arbitrage yet recognizes intraday execution risk.

Governance, accounting, and reporting

The sponsor oversees valuation policies for financial reporting under GAAP and intends to use a principal-market exchange price deemed Level 1 under ASC 820. The sponsor may execute stock splits or reverse splits to maintain convenient trading ranges without affecting proportional ownership.

The trust is an emerging growth company under the JOBS Act, which reduces certain reporting and audit attestation requirements relative to larger public companies.

Practical considerations for investors

Premium/discount discipline. Expect small intraday dislocations that arbitrage typically compresses. Suspensions of creations/redemptions can widen gaps.
Fee drag. The 0.25% Sponsor Fee reduces performance relative to spot bitcoin by that amount over time, before any extraordinary costs.
Custody comfort. Cold-storage majority with multi-site security and strict key management procedures; nonetheless, custody risk is not eliminated.
Tax pass-through. Sales of bitcoin by the trust—including to fund expenses—are taxable to shareholders. Plan accordingly with a tax adviser.
AP dependence. Creation/redemption relies on AP participation and operational stability at service providers and trading counterparties.

FBTC vs. holding bitcoin directly (high-level)

FBTC offers brokerage-account access, daily NAV, exchange trading, DTC settlement, and institutional custody. Direct holders control private keys and can transact on-chain but assume wallet and operational responsibilities themselves. FBTC’s design targets secure, segregated institutional custody with cold-storage majority and oversight, at the cost of fee drag and potential premium/discount effects.

FAQs

What does the 0.25% fee actually cover? It compensates the sponsor and covers ordinary operating expenses like custodian, transfer agent, index, distributor, listing, website, legal, audit, and routine regulatory fees. Extraordinary expenses are borne by the trust.

Does FBTC hold real bitcoin? Yes. FDAS holds the trust’s bitcoin in segregated accounts with a substantial majority targeted in cold storage and a small portion in hot wallets for operational needs.

Are creations and redemptions in bitcoin or cash? Cash-only as of the prospectus. In-kind would require regulatory approvals; timing and outcome are uncertain.

Where does it trade? On Cboe BZX under FBTC; investors buy and sell through brokers and pay normal commissions.

How is the index calculated? By Coin Metrics every 15 seconds using VWMP over rolling 60 minutes, with oversight by Fidelity Product Services LLC.

Will I get ’40 Act protections or an investment-adviser fiduciary standard? No. FBTC is not a ’40 Act fund, the sponsor is not an Advisers Act investment adviser, and it is not a CFTC-regulated commodity pool.

What are the tax implications? As a grantor trust, you’re treated as owning your share of the trust’s bitcoin. Trust sales or uses of bitcoin to pay expenses are taxable events that pass through to holders.

Bottom line

FBTC delivers spot bitcoin exposure in a publicly listed format with institutional custody and a 0.25% Sponsor Fee. Its cash creation/redemption model, cold-storage-first approach, and VWMP-based Index aim for robust operational design, while investors must weigh custody, premium/discount, regulatory-regime differences, and grantor-trust tax pass-through. For investors who need bitcoin access inside brokerage or qualified accounts, FBTC is a straightforward route with clear mechanics and defined roles.

Source: FBTC Prospectus : Crypto investing is now easier than ever - Fidelity

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Disclaimer: This explainer summarizes the current prospectus disclosures and is not investment, legal, or tax advice. Review the full prospectus and consult professional advisers before investing.