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Fidelity Dives Into the Cryptocurrency Market

Bitcoin and Blockchain, Finance and Securities

Fidelity Investments takes one of the largest steps into cryptocurrency by an institutional asset manager. Scheduled for general availability in early 2019, Fidelity Investments is creating a subsidiary that will be solely dedicated to bringing cryptocurrencies to institutional investors, hedge funds, family offices, and trading firms. Fidelity Investments is already the fifth largest asset management firm in the world, and provides “$7.2 trillion in customer assets and provides clearing, custody and investment services for 13,000 institutional advisory firms and brokers.”[1]

The subsidiary is called “Fidelity Digital Assets, [a] limited liability corporation based in Boston [that] will provide enterprise-grade custody solutions, a cryptocurrency trading execution platform and institutional advising services 24 hours a day, seven days a week designed to align with blockchain’s always-on trading cycle.”[2] The company will start off with 100 employees that will assist investors with three main services. The three services will include; custody services for bitcoin, ether, and other digital assets, “trade execution services that leverage an internal crossing engine and smart order routers that will execute trades using multiple third party cryptocurrency liquidity suppliers.”[3] The goal is to make it easier for all types of investors to understand and use the blockchain. Fidelity Investments chairman and CEO, Abigail Johnson, reiterates, “Our goal is to make digitally-native assets, such as bitcoin, more accessible to investors.”[4] With the purpose of advancing their digital asset offerings, they will be able to bring a new market to their already established firm.

The executives are hoping to build on the well-established name of Fidelity to take this giant step into digital currency trading. Other institutional firms have thought about trying out the crypto market, but have not yet made the necessary steps. “Goldman Sachs Group Inc. has been considering a plan to offer custody for crypto funds, Bloomberg reported in August. Northern Trust Corp. has examined the potential for custody services.”[5] The risk of the unregulated and volatile market that cryptocurrency is in makes them hesitant. Fidelity’s major move will no doubt open the door for other financial institutions looking to broaden their services, and their market.

[1] Del Castillo, M. (2018, October). Fidelity Launches Institutional Platform for Bitcoin and Ethereum. Retrieved on Forbes: Accessed on October 16, 2018

[2] Ib.

[3] Ib.

[4] Ib.

[5] Kharif, O. and Massa, A. (2018, October). Fidelity Starts Crypto Unit to Serve Wall Street Customers

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