Fidelity Announces New Crypto Offering Aimed At Institutional Investors

A Wall Street giant is getting into cryptocurrencies. 

At the Bloomberg Institutional Crypto Conference in New York, Fidelity Investments, a financial services behemoth with assets worth $2.5 trillion under management, announced the launch of Fidelity Digital Assets - a digital assets service business aimed at institutional investors. The new business offers an assortment of services targeted at institutional investors. These include custody of cryptocurrencies, trade execution by matching counterparties interested in trading digital assets, and customer service for digital currencies. Earlier, there were reports that Fidelity was developing a cryptocurrency exchange

The platform, which is expected to launch sometime in 2019, will begin offering these services for bitcoin and ethereum initially and will expand its portfolio of offerings later. In a press release announcing the launch, Abigail Johnson, Fidelity CEO and Chair, stated that the new service plans to “make digitally native assets, such as bitcoin, more accessible to investors”. “Digital assets are poised to become accepted as investable assets and stores of value, tradeable on global, licensed exchanges, and accessible to individuals and institutions around the world,” the company wrote in a post on blogging platform Medium. 

A Service In The Works Since 2014 

Fidelity’s new service offerings have been in the works for some time. The Boston-based company began researching bitcoin and cryptocurrencies in 2014, according to Tom Jessop – head of corporate business development at Fidelity. As part of the research, employees mined bitcoin, purchased cryptocurrencies from exchanges, and performed basic research on cryptocurrency characteristics. Subsequently, they applied the learning to fashion a new service offering.

Explaining the company’s decision to target institutional investors (as opposed to the retail market), Jessop said the current infrastructure was “heavily skewed” towards retail investors and early adopters. “We saw demand for an institutional quality offering,” he said, pointing to the increasing number of university endowments investing in cryptocurrency funds. "In our conversations with institutions, they tell us that in order to engage with digital assets in a meaningful way, they need a trusted platform provider to enter this space. These institutions require a sophisticated level of service and security, equal to the experience they're used to when trading stocks or bonds," explained Jessop. Fidelity itself services investment needs for 13,000 financial institutions, Jessop said and added that the new service already has a “robust pipeline of customers”.   

To be sure, several companies already offer similar or identical services within the cryptocurrency ecosystem. But they lack the name recognition and stamp of quality offered by a big name such as Fidelity. Jessop said today’s announcement could serve as a catalyst for existing players to do more due diligence for their offerings.

Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns 0.21 bitcoin and 1 Litecoin.

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