Wall Street Financial firms are slowly getting attracted to cryptos and the list of firms starting crypto services is just getting longer. The latest addition to this list is Boston based multinational financial services corporation, Fidelity as it announced an institutional platform for Bitcoin and Ethereum.
Fidelity spins off Fidelity digital assets to enter the crypto business
Fidelity Investments, the fifth largest asset manager in the world, announced that it is spinning off a separate company dedicated exclusively to bringing cryptocurrencies to institutional investors. This newly limited liability corporation will be called Fidelity Digital Assets and will focus on providing enterprise-grade custody solutions, a cryptocurrency trading execution platform, and institutional advising services. This company would be providing its services 24 hours a day, seven days a week designed to align with blockchain’s always-on trading cycle.
Fidelity already has access to 13,000 institutional advisory firms and brokers through which it provides financial services, clearing, custody, and investment associated services and manages $7.2 trillion in customer assets. With this new company, Fidelity Digital Assets will offer three main services to this already established network and the new customers it onboard. The most elaborate of these appears to be custody services for bitcoin, ether and other digital assets. In particular, the service is being designed to give institutional investors a compliant way to secure their assets by holding them in a physical vault.
Other Fidelity Digital Assets services will include trade execution services that leverage an internal crossing engine and smart order router that will execute trades using multiple third-party cryptocurrency liquidity suppliers. Importantly, these trading services do not amount to an exchange, but the piping that directly connects Fidelity customers to existing exchanges. To make it easier for institutions that are new to cryptocurrency to get involved, Fidelity Digital Assets will also offer a dedicated client services team to help with the onboarding process.
Leading the crypto spin-off business of Fidelity would Tom Jessop, Fidelity’s former head of corporate business development. While Jessop is certainly not a new name to the world of cryptocurrency and blockchain, he recently joined Fidelity, only with the expressed purpose of helping Fidelity with their digital asset offerings. Jessop was brought on board as president of Chain in April 2017 after 17 years at Goldman Sachs and tasked to help leverage his deep Rolodex of contacts to help bridge the gap between enterprise financial institutions and non-cryptocurrency applications of distributed ledger technology.
“Our clients are thinking about this as an investable asset class,” said Jessop. “They’re doing their research, they’re developing a thesis around why these tokens may have value in the future, and that’s really driving a lot of interest.”
This is not the first stint of Fidelity with cryptos, as it had begun experimenting with blockchain technology since 2013, with the discreet launch of its Blockchain Incubator, a part of the Fidelity Center for Applied Technology. In 2015 Fidelity Charitable started accepting bitcoin donations, and by February of this year, cryptocurrency accounted for the non-profit organization’s fastest-growing kind of donation, bringing in more than $69 million.
There was some excitement seen on the street with Fidelity’s announcement as some of the prominent names in the crypto industry tweeted about it
Here is what CZ from Binance tweeted sharing the news link of Forbes
Not a small fund. https://t.co/J785D8gTWW
— CZ Binance (@cz_binance) October 16, 2018
Joseph Young also tweeted saying this move by Fidelity was as Optimistic as the bitcoin ETF
Fidelity is the world’s largest independent brokerage with $2.45 trillion assets under management, is going to facilitate crypto trades.
I would say this is as optimistic as the approval of a Bitcoin ETF
— Joseph Young (@iamjosephyoung) October 15, 2018
While CryptoManRan, Ran NeuNer tweeted saying big names will definitely attract institutional monies in cryptos
Will this move by Fidelity brings in huge institutional monies into cryptos, is something time will tell but it definitely is a big positive for the cryptocurrency ecosystem.
What do you think about this strategic move of Fidelity’s towards cryptos? Do let us know your views on the same.
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Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.