Big news today from Bloomberg‘s Matthew Leising and Alastair Marsh:
“Fidelity Investments is targeting a March launch date for its Bitcoin custody service, according to three people with knowledge of the matter, as the mutual-fund giant moves forward with a plan that could help ease fears of trading cryptocurrencies.”
“We are currently serving a select set of eligible clients as we continue to build our initial solutions,” the company said in a statement.
Over the next several months, we will thoroughly engage with and prioritize prospective clients based on needs, jurisdiction and other factors.
A source familiar with the new enterprise told CoinDesk on Tuesday that the cold storage function of Fidelity’s new Bitcoin custody service is already live, with some assets currently under management.
Fidelity Digital Assets
Last October Boston-based Fidelity, a financial services company with $7.2 trillion worth of assets under management for 27 million clients, announced its plans to enter the crypto market, citing proven institutional demand for cryptocurrency.
At the time, Fidelity launched a separate company to manage crypto assets called Fidelity Digital Assets, and announced the new crypto holding company would be headed up by Tom Jessop, a 17-year finance veteran from Goldman Sachs who left Wall Street to join blockchain startup Chain as president in 2017, and then Fidelity in 2018.
Judging from his remarks in this short interview with The Banker at the time of his brief stint with Chain, one can see why big finance companies, as well as cryptocurrency enthusiasts, might appreciate where Jessop’s head is at (video below).
Institutional Finance Meets Disruptive Crypto
Fidelity is hoping to bring the solutions and technical capabilities of a trillion dollar global asset management company to bear on the unique problems faced by institutional investors who want to diversify some of their portfolio into crypto holdings.
“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.”
The website of Fidelity Digital Assets describes the new company as a “full-service, enterprise-grade platform for securing, trading, and servicing investments in digital assets,” by providing “highly available, trusted, enterprise-grade services to store, transact, and service…digital asset investments.”
More specifically, Fidelity has been planning since at least last year to offer offline, cold storage custody solutions for the major cryptocurrencies out there, starting with Bitcoin to test the waters, as well as trade execution, and other related services specific to investing in cryptocurrency.
Next Stop: Mass Market Adoption
As Joseph Young reported for CCN last year:
Most of the infrastructure that is being built by leading financial institutions in the U.S. market are being tailored towards institutional investors that are seeking to invest at least $5 million to the cryptocurrency market, which is the minimum investment threshold on Coinbase Custody.
The March launch for Fidelity’s new Bitcoin services is welcome news to a crypto market in recovery from a rough year in 2018, with fears of a possible sub-$3000 BTC price drop portending a “crypto nuclear winter.”
But cryptocurrency is clearly no longer the purview of a lunatic fringe of math whizzes and hyper-caffeinated anti-government crypto-anarchists. This move by Fidelity among other major global finance players proves 2019 is the year Bitcoin and a couple other major cryptos enter the mainstream investment world as a sought after asset class.
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