Late last year, Fidelity Investments — a financial services giant with over $2 trillion worth of assets under management and thousands of institutional clients spanning the world — revealed that it would be launching a cryptocurrency branch.
Named Fidelity Digital Assets, many in the industry had high hopes for the subsidiary, claiming that it could be the one institutional onramp into cryptocurrencies from Bitcoin to Ethereum that will drive the next bull run.
But, to the dismay of many, Fidelity revealed that its digital asset branch would first be focusing on Bitcoin. After all, the leading cryptocurrency is the most popular amongst traders, and the company has long been fascinated by it, exemplified by the fact that it mines BTC in a Blockstream facility.
Despite this, Tom Jessop, head of Fidelity Digital Assets, recently revealed that the addition of Ethereum to the platform, which currently offers institutions with trade execution and custodial services, will be a focus for 2020.
Fidelity Looks to Expand Horizons Beyond Just Bitcoin
Tom Jessop recently sat down with industry outlet The Block to talk Fidelity Digital Assets’ latest updates.
During the podcast episode, Jessop said that the firm has “done a lot of work on Ethereum” over recent months, and is looking to add support for the second-largest cryptocurrency by market capitalization within the coming year. The catch: clients of the firm need to show that they demand Ethereum, for Bitcoin, the digital currency with the longest track record, has long been the star of the institutional crypto show due to risk factors. Jessop elaborated:
“How do I know that if I buy this thing, it’s gonna be around tomorrow? Like what indication of durability or longevity do I have based on the fact that the history of this asset is 10 years old?”
Earlier this year, Jessop was quoted as saying that his firm has been avoiding Ethereum due to the countless hard forks and potential risks that could come with the planned consensus changes.
These latest comments imply that Jessop is not as wary of hard forks anymore, though the planned migration to Proof of Stake, should it take place in 2020, is likely to complicate Fidelity’s support of Ethereum.
Jessop’s appearance on The Block’s podcast is pertinent, for Fidelity Digital Assets late last month secured a Trust License from the New York State Department of Financial Services (NYDFS).
This license gives the venture the permission to launch a cryptocurrency custody and trade execution platform for institutions and individual investors for New York residents — this being notable because New York is where much of American wealth is managed.
Ethereum’s Strong Fundamental Trend
The news regarding Fidelity’s potential support for Ethereum adds to the confluence of positive developments the blockchain has seen over recent weeks.
Earlier this month, Ethereum developers rolled out the latest iteration of the software, “Istanbul.” This hard fork brings a number of improvements to the chain, including a technical upgrade that allows Ethereum to better interact with another popular altcoin, ZCash.
Istanbul also gives developers the ability to roll out so-called “ZK Rollups,” which is an application that will allow “Layer 2 scaling on Ethereum supporting upwards of 3000tps (larger than Visa), while maintaining decentralization and privacy. This is a big win for ETH-based stablecoins, [like USD Coin (USDC)],” as Circle’s Jeremy Allaire has written on the matter.
With the capability of transacting thousands of near-instant and cheap transactions per second (that are private no less), Ethereum developers could begin to build applications that are similar to if not better than their real-world counterparts, creating a possible wave of adoption.