One of the biggest names in financial services wants to help institutional investors add bitcoin and other cryptocurrency assets to their multi-billion dollar portfolios.
Citing proven institutional demand for cryptocurrency products, Fidelity Investments, the fifth-largest asset manager in the world with 27 million clients and $7.2 trillion in customer assets, has announced that it will launch a separate company to provide cryptocurrency custody and trade execution services for institutions.
Dubbed Fidelity Digital Asset Services, CNBC reports that the company will serve as a bridge between institutional investors and the heretofore retail-focused cryptocurrency industry, which has lately sought to roll out the red carpet for institutions.
“Our goal is to make digitally-native assets, such as bitcoin, more accessible to investors,” Fidelity Investments Chairman and CEO Abigail Johnson said in a press release. “We expect to continue investing and experimenting, over the long-term, with ways to make this emerging asset class easier for our clients to understand and use.”
The new venture will be led by Tom Jessop, who, according to his LinkedIn profile, spent 17 years at Goldman Sachs before joining blockchain startup Chain as president in 2017 and then Fidelity in 2018 as head of corporate business development.
“We saw that there were certain things institutions needed that only a firm like Fidelity could provide,” Jessop told CNBC. “We’ve got some technology that we’ve repurposed from other parts of Fidelity — we can leverage all of the resources of a big organization.”
CCN reported earlier this year that Fidelity appeared to be building a cryptocurrency exchange, as the firm had advertised internally for developers to help build a “Digital Asset exchange.” Departing from the public comments of many CEOs in the mainstream financial industry, Abigail Johnson not only attended a cryptocurrency conference last year but also told the audience that she was a “believer” in the technology.
That open stance has enabled Fidelity to position itself as a potential leader in the burgeoning cryptocurrency market, which has reportedly begun to attract major university endowments such as Harvard and Yale.
“You might look at the crypto world and say ‘wow is this a new thing’ but we’ve been managing key materials for a long time,” Jessop continued in the CNBC interview. “We took our learnings in how to run enterprise security, then through our exploration of bitcoin and some of the people we’ve hired, quickly developed some of the crypto native expertise and federated the two those things.”
Fidelity joins a growing list of legacy financial giants who have seen enough potential in the cryptocurrency space to justify investing in the resources to produce products tailored for this nascent marketplace. Intercontinental Exchange (ICE), Goldman Sachs, Citigroup, and Morgan Stanley are just a few of the names that plan to roll-out digital asset services within the near future.
Of course, the 2018 bear market may have dampened enthusiasm in some boardrooms. Barclays, as CCN reported this morning, is said to have quietly placed its cryptocurrency trading desk project “on ice,” while Goldman Sachs shelved its trading desk plans to prioritize a cryptoasset custody service.
Fidelity, though, has not been dissuaded by the massive drop in prices that has occurred over the past 10 months.
“No one said when some of these early stage Internet companies in 2000 were going out of business ‘gee the Internet is toast’,” Jessop concluded. “We don’t focus too much on the price. It’s a foundational technology — people are trying to get exposure to the trend, and expect volatility in the assets themselves.”