Fidelity to Provide Enterprise-Grade Digital Asset Solutions for Institutional Investors

News and Analysis

U.S. investment firm Fidelity, which administers over $7.2 trillion in client assets, has announced the launch of Fidelity Digital Asset Services, a new company that will offer enterprise-quality custody and trade execution services for cryptocurrencies to institutional investors such as hedge funds, family offices and market intermediaries.

According to an October 15 press release, Fidelity Digital Assets will focus on providing a “secure, compliant, and institutional-grade omnibus storage solution for bitcoin, ether and other digital assets.”

“Our goal is to make digitally-native assets, such as bitcoin, more accessible to investors,” said Abigail P. Johnson, Chairman and CEO of Fidelity Investments. “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.”

Tom Jessop, head of the newly-created business, said that Fidelity began exploring blockchain and crypto “several years ago, and those efforts have been successful in helping us understand and advance our thinking around cryptocurrencies.”

“The creation of Fidelity Digital Assets is the first step in a long-term vision to create a full-service enterprise-grade platform for digital assets,” he said.

Fidelity Investments provides financial services for $7.2 trillion in customer assets and provides clearing, custody and investment services for 13,000 institutional advisory firms and brokers.

As detailed by Forbes, Fidelity Digital Assets will offer three main services. The most elaborate of these appears to be custody services for Bitcoin, Ether and other digital assets. In particular, the service is being designed give institutional investors a compliant way to secure their assets by holding them in a physical vault.

The vaults “distributed over multiple geographically dispersed locations.” are so-called “cold storage” facilities, according to Jessop, meaning they not only consist of software-based security protections but are physically separated from the internet, making them more difficult to hack.

Other Fidelity Digital Assets services will include trade execution services that leverage an internal crossing engine and smart order router that will execute trades using multiple third party cryptocurrency liquidity suppliers. Importantly, these trading services do not amount to an exchange, but the piping that directly connects Fidelity customers to existing exchanges.

Jessop also says that Fidelity views crypto assets as more than just a store of value, but an investment in future use-cases currently being developed, or perhaps not yet conceived.

“Our long term vision is really that you’ll see lots of assets exist in this new medium,” said Jessop. “And this new medium will bring a host of benefits around efficiency, around access, around automation, which is very exciting for financial services.”

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