US-based Fidelity Investments announced the launch this week of a digital assets management business catering to hedge funds, corporations and families.
The new branch, Fidelity Digital Assets Service, will offer handling, storage and trade execution services for investors interested in cryptocurrencies.
The 72-year old firm is venturing into the volatile cryptocurrency markets despite minimal regulation and declining prices.
Fidelity CEO Abigail Johnson is not fazed by the recent bitcoin downturn. On the contrary, she expressed a confident outlook in a recent press release.
“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.”
In an interview with CNBC, Fidelity Digital Asset manager Tom Jessop said that the idea for a standalone crypto investment company has been more than a year in the works.
“We saw that there were certain things institutions needed that only a firm like Fidelity could provide,” Jessop explained. “We’ve got technology we’ve repurposed from other parts of Fidelity — we can leverage all the resources of a big organisation.”
The Digital Asset firm already works with more than 13,000 institutional clients. With the launch of cryptocurrency services, Jessop expects this number to increase.
Where (Almost) No Large Firm Has Gone Before
There are few major US companies in the cryptocurrency custodial market. It is a gamble, but Fidelity’s commitment is no bluff. The Digital Assets Service will operate as a separate company out of offices in Boston, with a staff of 100.
And unlike other established firms, Fidelity Investments has a close and somewhat personal tie to the cryptocurrency community.
Since 2014, CEO Abigail Johnson has been advocating the potential of blockchain technologies. She was also one of the first to see massive value in bitcoin and its alt-coin cousins.
“A few plus years ago, myself and a few other senior executives here were just curious about what was going on particularly with bitcoin,” Johnson told CNBC recently. “We started getting together to say ‘we’re got to understand this.’”
At Johnson’s urging, Fidelity Investments entered the field of coin mining — they started when bitcoin’s price hovered at $180 and haven’t disclosed profits although the CEO has mentioned it going “surprisingly” well.
Fidelity recently started accepting charitable donations in bitcoin as well, demonstrating the firm’s awareness of its diverse customer base.