Fidelity Investments has confirmed that it will launch a new company for the custody and trade execution of digital assets in a major move for the cryptocurrency industry.
Known as Fidelity Digital Assets, the company will offer trading and custody of cryptocurrencies to institutional investors such as hedge funds, family offices and market intermediaries, the $7.2 trillion asset manager said in a statement.
The firm added that although there are many retail service providers currently available in the market, there is a gap in support for institutions looking to enter the space, citing research from Greenwich Associates which found that 70% of institutional finance executives believe cryptocurrencies will have a place in the future of the industry.
“Our goal is to make digitally-native assets, such as bitcoin, more accessible to investors,” said Abigail Johnson, 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.”
Fidelity Digital Assets will provide a secure and compliant storage solution for Bitcoin, ether and other digital assets, consisting of cold storage, multi-level physical and cyber controls for security. It will also use its internal crossing engine and smart order router for trade execution of cryptocurrencies, allowing for execution at multiple market venues.
“We started exploring blockchain and digital assets several years ago, and those efforts have been successful in helping us understand and advance our thinking around cryptocurrencies,” said Tom Jessop, head of Fidelity Digital Assets. “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.”
Jessop added that institutions have told the asset manager that in order to engage with cryptocurrencies they need a trusted platform provider, with a sophisticated level of security and service similar to when trading stocks and bonds, to enter the space.
“With Fidelity Digital Assets, we’re building a scalable infrastructure for digital assets that meets the expectations of what it means to work with Fidelity, while leveraging unique capabilities of the blockchain to create a completely new offering,” Jessop concluded.