A new research study sponsored by Fidelity Investments, administrators of nearly $7.5 trillion USD worth of assets and backers of a fledgling crypto arm in Fidelity Digital Assets, found that 40 percent of institutional investors are agreeable to investing in cryptocurrencies during the next half decade.
The study, conducted by the firm Greenwich Associates between late November 2018 and early March 2019 for the Fidelity Center for Applied Technology (FCAT), found that 22 percent of such investors had already allocated some investments toward the cryptocurrency space. FCAT is the wing of Fidelity geared toward helping enterprises embrace new technologies like artificial intelligence and blockchain.
Fidelity Digital Assets president Tom Jessop hailed the findings as a sign that the cryptoverse was evolving from its fledgling and adolescent status:
“We’ve seen a maturation of interest in digital assets from early adopters, like crypto hedge funds, to traditional institutional investors like family offices and endowments. More institutional investors are engaging with digital assets, either directly or through service providers, as the potential impact of blockchain technology on financial markets – new and old – becomes more readily apparent.”
47 percent of the respondents to the study said that cryptoeconomy investments would be fit for their portfolios, while 72 percent said they would prefer to invest in “investment products” that hold cryptocurrencies themselves.
— Fidelity Digital Assets (@DigitalAssets) May 2, 2019
And what’s enticing the more agreeable investors? 46 percent of the study’s participants said the lack of correlation between crypto prices and other mainstream assets was a point of interest, whereas 47 percent of the answerers hailed cryptocurrencies as being innovative.
A lack of regulatory certainty around the cryptoeconomy and the volatility of crypto prices were commonly cited as hampering institutional sentiments, but among some entities more than others. The Fidelity study found that an impressive 80 percent of family office firms saw cryptocurrencies in a favorable light, for example.
Altogether, the signs are pointing toward institutions increasingly taking the leap into crypto, Jessop said:
“Institutional sentiment mirrors many of the positive developments we’ve seen in the underlying ecosystem. Venture investment in the sector continues at a healthy pace, complemented by an increasing number of security token offerings (STOs), and the global regulatory environment remains cautiously constructive.”
How is Fidelity Digital Assets Looking?
When Fidelity revealed its forthcoming “full-service” cryptocurrency platform last fall, crypto ecosystem proponents cheered the development as one of the biggest adoption headlines in all of 2018.
In the team’s announcement, Fidelity Digital Assets acknowledged they were gunning to become a crypto custody titan for enterprise clients in the future:
“We imagine a world, soon, where all types of assets are issued natively on a blockchain or represented in tokenized format. Addressing custody issues for institutional investors is one critical step in order for these markets to continue to develop. By building native expertise in these technologies we hope to be well-positioned to serve the needs of our clients for the long term.”
Since then, Fidelity Digital Assets has been hard at work on actualizing that “well-positioned” vantage. Back in January, the team released a status update that revealed they had already been servicing a few undisclosed clients as part of a “final testing and process refinement periods.”
If all works according to plan, then the Fidelity platform will serve as a conduit through which ever more mainstream companies will feel comfortable participating in the cryptoeconomy.
That dynamic will likely prove reflexive regarding the aforementioned institutional sentiments toward crypto: the more institutionally-geared plays that arise such as in the likes of Bakkt, ErisX, and Fidelity Digital Assets, the more large enterprises are going to be favorable toward investing in crypto.
For its part, ErisX launched its crypto spot market platform this week, but Bakkt and Fidelity Digital Assets are still angling toward their respective launches for now.