Fidelity Investments is establishing a new subsidiary dedicated to help professional investors – including hedge funds and family offices – gain exposure to crypto assets using an over-the-counter (OTC) trading desk.
The venture was built to overcome barriers that have blocked institutional investment in digital assets and minimize the risk of loss due to theft or operational errors.
The new business unit, dubbed Fidelity Digital Assets, combines Fidelity’s expertise from asset administration with digital asset security, in a bid to provide a safekeeping service for investment houses looking to gain exposure to the rapidly emerging asset class.
The new company features institutional-grade, crypto linked services including a custody offering to safeguard holdings and execution services 24 hours a day, seven days a week.
The Boston-based asset manager says the new firm will provide infrastructure and an operational framework for the wider investment management industry and enable investors to embed a consistent set of best practice standards within their businesses.
Fidelity Investments, which manages $7.2 trillion worth of mutual fund assets, has been a leader in helping clients navigate crypto markets, and was among the first Wall Street firms to allow Coinbase clients to view their crypto holdings right on its platform. A few months ago, Business Insider reported that Fidelity is planning to open a cryptocurrency exchange.
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The company’s CEO Abigail Johnson has also exclaimed that she loves “this stuff — bitcoin, ethereum, blockchain technology —” and what the future holds. “Our goal is to make digitally-native assets, such as bitcoin, more accessible to investors,” she added in a statement.
In addition, Fidelity allowed employees to use cryptocurrency to pay for canteen lunches, though it was aware of SEC’s restrictions over handling virtual coins as a utility currency.
More Competition is Coming
Fidelity Digital will also be going up against established players like Coinbase’s GDAX and Circle’s CircleTrade as the move to appeal to institutional investors is the latest such effort from players within the cryptocurrency industry.
The competitive landscape for cryptocurrencies in the US is heating up. Coinbase announced that it is moving forward with a plan to acquire licensure that would allow the company to begin offering blockchain-based securities and participate in the ICO market. The company has also acquired the broker-dealer Keystone Capital Corp., based in California.
Also in May, Robinhood raised its latest round of funding, bringing in $363 million at a $5.6 billion valuation.
The Silicon Valley company said that it would use the funds to increase hiring and develop new products around its stock trading app, which allows users in states where Robinhood has obtained regulatory approval to acquire digital currency with no minimum purchase amount.