It seems that 2019 is already shaping up to be a solid year for the cryptocurrency industry. Sources tell Bloomberg that one of the world’s largest asset managers will soon offer Bitcoin (BTC) trading to its tens of thousands of institutional clients, setting the stage for a large capital inflow into digital assets.
Fidelity May Soon Expand Bitcoin Offering
In late-October of 2018, Fidelity Investments, a Boston-based financial services provider, revealed that it would be launching Fidelity Digital Asset Services (FDAS) — a branch focused solely on cryptocurrency and blockchain technology. And since the announcement, stakeholders the industry over have waited eagerly for FDAS’ inaugural day in operation. But during the months that followed, headlines around the Fidelity subsidiary slowed, and some cynics speculated that it was nothing but a marketing ploy.
However, this changed with hearsay in February. As reported by Blockonomi, insiders told Bloomberg that FDAS’ first product, a fully-fledged Bitcoin custody solution, was slated to launch in March if final testing turned out well. As the branch’s chief, Tom Jessop, told reporters later, the rumor was true, confirming that Fidelity was securing BTC for its clients. Yet the company will soon branch out from being a cryptocurrency custodian.
New reports, namely one from Bloomberg posted Monday, divulge that the option to conduct cryptocurrency purchases and sales will soon be available on FDAS. Those familiar with the matter told the outlet that “within a few weeks,” the institutional clientele will have access to the aforementioned solution. It isn’t clear if Fidelity will be offering spot market trading or some darkpool/over-the-counter (OTC) solution to its clients. Yet, as explained by a company representative, the service will be “focused on Bitcoin.” She further adds:
“We currently have a select set of clients we’re supporting on our platform… We will continue to roll out our services over the coming weeks and months based on our clients’ needs, jurisdictions, and other factors.”
This news comes just days after Fidelity unveiled an institutional survey they commissioned, which revealed that institutions are widely amicable towards the digital asset class. Out of the “more than 400 U.S. institutional investors” polled, 47% agreed that cryptocurrencies should have a place in their portfolios.
Out of that pro-crypto group, which included pensions, family offices, crypto funds, and endowments, 72% noted that they would be most comfortable with holding digital asset funds, like the array of proposed Bitcoin ETFs and Grayscale’s GBTC. On the matter of why a cryptocurrency allocation is logical, the institutions among the 47% noted that they see cryptocurrencies as innovative technology and an asset class barely correlated with traditional markets (asymmetrical risk) and has “appealing characteristics”.
Committed To Crypto
No matter of FDAS’ launch goes well or not, all this goes to show that the American financial giant is committed to cryptocurrency. Ari Paul, the founder & chief investment officer of BlockTower Capital, would agree with this cheery sentiment.
In a tweet posted in late-March, Paul, who (in)famously made a $1 million bet that BTC was going to surmount $50,000 by 2018’s end, notes that there are “hundreds of passionate advocates” for cryptocurrency at Fidelity, from the C-suite to the lower rungs of the executive ladder.
In fact, Paul states that in 2015, the chief executive of the institution herself, the esteemed Abigail Johnson, was personally mining Bitcoin, right in her lofty office. He adds that there are more crypto-focused staffers at Fidelity than the “five biggest industry funds combined.”
Fidelity’s cryptocurrency culture is bonkers. Literally hundreds of passionate advocates at every level of seniority at the firm. They have more people working on crypto than the 5 biggest crypto funds combined.
— Ari Paul ⛓️ (@AriDavidPaul) March 27, 2019
This might not be hearsay either. In an episode of “Unconfirmed” with industry journalist Laura Shin, Jessop stated that his company has an R&D branch that has eyed cryptocurrencies since 2013-2014. He even quips that once upon a time, the company even had an internal pilot that allowed employees to purchase food for Bitcoin, underscoring Fidelity’s long-standing support for what many traditional economists have deemed the devil’s spawn.
It is as clear as day that Fidelity doesn’t intend to slow its foray into cryptocurrency anytime soon, that’s for sure.