Article by Abhimanyu Krishnan
Investment firm Fidelity Investments, which serves over 27 million customers, announced on Monday its plans to open a cryptocurrency trading desk to institutional investors through a new company called Fidelity Digital Assets Services. This marks the first time a Wall Street firm will offer trading and custody services in the cryptocurrency market to investors.
The new service is expected to begin operations in 2019, with officials saying that the thought of building a bridge between the cryptocurrency market and heavy investors was an idea long being incubated. Services will be directed towards hedge funds, endowments, and family offices; retail investors are not on the cards yet.
Until now, Fidelity’s chief offerings included 401k and retail-brokerage with a total asset management of $7.2 trillion. The new service, as declared by Head of Corporate Development Tom Jessop, is a bold move intended primarily to serve institutional investors.
Speaking to the The Block, Jessop described the company’s effort over the past year to bring in more investments to the unique asset class that is cryptocurrency, saying:
A lot of the effort over the last 6 to 9 months has been taking what had already been built and elevating it to a level in which we were comfortable to go to market. While there are many places for consumers to buy and trade crypto, we didn’t see analogous developments for institutions.
Chairman and CEO of Fidelity Investments Abigail Johnson, who is known to have a positive view on cryptocurrencies, stayed true on her promise from last month that Fidelity would have a few crypto-related announcements by the year’s end.
A statement in a press release reiterates her vision for the company in the space:
Our goal is to make digitally native assets, such as bitcoin, more accessible to investors. 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.
Last year, it was also revealed that Fidelity was mining cryptocurrencies.
Fidelity is very keen on technology, investing nearly $2.5 billion in technology — including blockchain and artificial intelligence.
They join several other companies in the effort to open up the market to more traditional investors. Goldman Sachs, Gemini, Coinbase, and Ledger, among many others, offer similar services.
Institutional Investment on the Rise
Institutional investment is widely seen as a prerequisite for mass adoption, with the likes of billionaire ex-hedge fund manager Mike Novogratz repeatedly predicting such investment is imminent and a precipitator of wider public adoption.
Crypto investor and enthusiast Anthony Pompliano has also displayed high confidence in the idea that institutions will revive the market. Earlier this year, he stated that incoming institutional money would drive the price of Bitcoin to the region of $50,000 by the end of 2018.
With only a few months left before the year ends, that event seems more unlikely — but the cryptocurrency space can at least cheer the fact that more established, traditional financial firms are beginning to see the possibilities with digital assets. The creation of services by firms like Fidelity Investments will give typically non-tech savvy investors a safe, familiar, and simple way of dabbling in the market.