With $7.2 TRILLION dollars and 27 million clients, Fidelity is the 4th largest assetmanagement company in the world and it is now looking to service it's 13,000 institutional investors with cryptocurrency related services such as custody and brokerage. That makes Fidelity the first of the existing financial order to create a bridge between the old financial world and crypto.
Fidelity
Fidelity investments is huge. With 27 million clients and a whopping $7.2 trillion (with a 't') dollars in assetmanagement it is the world's 4th largest assetmanager in the world. After servicing the traditional financial world for years, Fidelity has announced this monday that it is starting a subsidiary called Fidelity Digital Asset Services, which intends to provide custodial and brokerage services to it's 13.000 existing institutional investors.
Fidelity Digital Asset Services is no small endeavour either. With 100 employees it is targetting Fidelity's existing institutional customerbase and is working on onboarding the first of them right now. Early 2019 they will open up their services to the general public.
Crypto-custody and brokerage is big
While a lot of eyes have been fixated on ETF's, which do not deal in 'physical Bitcoins' but derivatives, this announcement by Fidelity is actually potentially a huge deal. Fidelity enjoys an existing reputation as one of the leading financial service providers and has a long track record of assetmanagement.
Large institutions are waiting on the side-lines, eager to step into crypto, but until now have missed the tools they require in order to do so. One major hurdle they face is the risks involved with crypto with regards to hackers, theft or simply user error. It is for this reason that custodial services are being worked on by companies such as Coinbase or Gemini, but also being explored by Goldman Sachs and Northern Trust. Fidelity is now the first party to actually start offering these services, which will enable institutions to enter the crypto-space without worrying about the associated risks of crypto-assetmanagement.
Not only will Fidelity take care of the custodial side of things, but they will also allow for the buying and selling of cryptocurrencies such as Bitcoin and Ethereum 'and others', through multiple market venues that fit their high Fidelity quality criteria. Assumingly this means they will partner up with a variety of exchanges, of which Coinbase might be a likely contender considering there is some link between the Fidelity phone app and Coinbase already.
13.000 institutional investors
Essentially this means that the last major hurdle is being taken away for institutional investors to enter the space, of which Fidelity knows at least 13.000. Much like how these institutions would be able to invest in, for example, gold they can now invest in crypto in more or less the same way.Although the institutional clients themselves will not hold actual Bitcoin and other cryptocurrencies, Fidelity will hold these for them. Much unlike the much-discussed ETF's and Futures markets, the Fidelity custodial and brokerage services will hold and manage actual crypto. In other words: institutions can actually buy in now and their buying will take actual crypto off the market.
Forget about the ETF! Fidelity Digital Asset Services could be a lot better! Together with the upcoming Bakkt, I believe we are nearing the time that the onboarding of actual institutions into the space can begin. Is it time for another bull-run? We'll see. Usually these things tend to take a few months to garner some momentum, but sooner or later it is bound to have an impact and bring in the fresh money that the crypto-market so desperately needs right now.
> Read the news about Fidelity's new services on CNBC here <
