Fidelity Investments is launching a new business designed to give its institutional clients easy access to digital currencies such as bitcoin. Known as Fidelity Digital Asset Services LLC, the company will purchase and sell cryptocurrencies for family offices, hedge funds and other monetary ventures.
All coins will be sourced from large, over-the-counter digital exchanges and housed using cold storage to ensure customer funds consistently remain safe. Right now, Fidelity’s services are limited to only bitcoin and ether, though representatives say they’re looking to expand their offerings in 2019.
Chairman and chief executive of Fidelity Abigail Johnson comments:
“Our goal is to make digitally native assets, such as bitcoin, much more accessible to investors… I love this stuff – bitcoin, Ethereum, blockchain technology, and what the future holds.”
What’s Making Institutional Players Stay Away?
Volatility in crypto prices – along with the lack of custody and other traditional banking services – has aroused feelings of worry and concern amongst institutional investors and prevented many of them from being comfortable enough to take part in the cryptocurrency arena.
Fidelity is hoping to change all that by allowing trades and sales in a more traditional, regulated environment and boosting the market maturity of both bitcoin and ether.
Big Plans for the Future
Fidelity’s digital assets department will be headed by Tom Jessop, managing director at Goldman Sachs Group Inc and former president of the tech startup Chain. He confidently explains:
“Something like Fidelity coming into this market, we think, will have a positive effect on the whole market… We started exploring blockchain and digital assets several years ago, and these efforts have been successful in helping us understand and advance our thinking around cryptocurrencies. The creation of Fidelity Digital Assets is the first step in a long-term vision to create a full-service enterprise-grade platform for digital assets.”
A Little History on Fidelity
The company currently employs over 100 individuals and is the fourth-largest asset manager with just over $7 trillion in combined assets as of December 2017. It also serves roughly 13,000 separate institutions.
Last year, Fidelity began allowing its retail clients to view their holdings of bitcoin and other digital currencies hosted on Coinbase’s website. It was also alleged to be testing blockchain technology internally.
Other Companies Have Some BIG Ideas
This is not the first time a large, traditional investment platform has entered the crypto arena. Last August, the Intercontinental Exchange (ICE), software king Microsoft and coffee giant Starbucks partnered to form what is known as Bakkt, a platform designed to allow customers to sell, buy and trade cryptocurrencies in a formal and regulated environment. The venture is expected to make its official debut this coming November.
Read: What is Bakkt ?
Bakkt is hoping to make cryptocurrencies more usable and plans to issue physical, one-day bitcoin futures contracts that once expired, will reward their users with bitcoin rather than cash. The organization is currently awaiting approval from the Commodity Futures Trading Commission (CFTC).
We Need You, Institutional Investors!
Fidelity also joins a long list of high-end crypto ventures seeking to provide institutional players with easy access to the crypto market, though interestingly, not all have worked the way they should. Late last year, digital exchange Coinbase unveiled plans to open a hedge fund that gave institutional investors access to several of its listed cryptocurrencies.
Unfortunately, due to lack of interest and profits alike, the company was forced to reject the project and has replaced it with a new feature aimed at retail investors. Known as Coinbase Bundle, the product has been around since late September and allows new entrants to garner crypto investments for a minimum of $25.
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