Fidelity Investments Unveils Fidelity Digital Assets, An Institutional Crypto Trade Platform

Announcements, Innovation, Investing, News | October 15, 2018 By:

Fidelity Investments has launched Fidelity Digital Asset Services, LLC, which will allow institutional investors to purchase and sell cryptocurrencies for family offices, hedge funds and other monetary ventures.

All coins will come from large, over-the-counter digital exchanges and housed using cold storage. To start, Fidelity’s services will be limited to bitcoin and ether, though company representatives say they will expand in 2019.

“Our goal is to make digitally native assets, such as bitcoin, much more accessible to investors,” chairman and chief executive of Fidelity, Abigail Johnson, said in a statement.

The move by Fidelity is a major step forward for cryptocurrency trading and the industry in general. Volatility remains a concern for institutional investors, but Fidelity is betting that the company’s stature in the investment business will boost confidence and activity.

Fidelity Digital Assets already has 100 employees on its roster, and it will be headed by Tom Jessop , managing director at Goldman Sachs Group Inc. and former president of the tech startup Chain.

“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,” Jessop stated in the press release.

The company is one of the largest asset management firms in the world, managing just under $7 trillion in combined customer assets. It also serves over 13,000 separate institutions.

Fidelity dipped its toe into the waters last year by allowing its clients to view holdings on Coinbase in their Fidelity dashboard

The entrance by Fidelity is the harbinger of other moves by bigger players. Intercontinental Exchange ( ICE ), Microsoft and coffee giant Starbucks have formed Bakkt , a platform for selling, buying and trading cryptocurrencies.  The venture is expected to debut next month upon final regulator approval.

The industry reacted positively to the big news from Fidelity.

Bruce Elliott, President of ICOx Innovations, which creates loyalty, reward, gaming, and payment cryptocurrencies for established companies:

“Fidelity is one of the most well respected brands in markets and financial services.This is a huge step forward in mainstream adoption of cryptocurrency. For many reasons, seasoned investors have either been shut out of crypto markets or have been slow to invest up until now. This is a signal that financial markets and regulators are gaining clarity and comfort on the outlook for trading cryptocurrencies.”

Ben Waters, Head of Digital at blockchain infrastructure provider IOST:

Institutions like Fidelity entering the space can be a good thing for crypto, as long as the exploitative financial systems (e.g. fractional reserve banking, commingling, etc.) are not piggybacked into the crypto space. Historically, the legacy financial system has been used to exploit the general public — making the rich get richer and creating centralized points of failure.”

Akbar Thobhani, CEO of SFOX, a crypto prime dealer that just raised $22M to build an institutional crypto asset management platform:

“Fidelity’s announcement proves that cryptocurrency will not be going anywhere anytime soon. There’s already significant interest in security tokens and the compliance, cost-efficiency, and liquidity they provide to securities markets, but they will need to be registered, traded, and structured correctly. As the second-largest global exchange by market cap, Fidelity Digital Asset Services’ focus on cryptocurrency custody and trading services for enterprise clients showcases the commitment and interest they’re seeing from their clients, but we’ll really hit a turning point when Fidelity offers cryptocurrency to their retail and 401K customers.”

Andy Bromberg, co-founder and president of CoinList, a platform for managing token sales:  

“We’re excited to see established financial firms meaningfully enter the crypto market. Every announcement is a vote of confidence in the future viability of digital assets. We expect these moves to further increase the confidence of regulators and help drive the law forward.”

Josh Fraser, co-founder of Origin, an open-source blockchain platform for creating p2p marketplaces like decentralized versions of Airbnb, Uber, and Craigslist:

“Blockchain technology is going to revolutionize the traditional finance world, just like the internet has touched every part of our daily lives. Institutions are holding back billions of dollars of cryptocurrency market investment due to lack of trusted custody providers. Fidelity is well-positioned as a trusted brand, but they’ll need to develop new technical competencies if they want to get into the custodianship business.”

Rahul Sood, CEO of Unikrn, an applied crypto at the merger of blockchain, esports, and wagering. He also sits on the board of Palladium, a project working to launch one of the world’s first crypto security exchanges:

“Crypto is going to break the status quo in fintech, including securities. Fidelity will not be alone. Soon, asset managers will look at blockchain the way banking looks at the Internet: do or die.”