This is, indeed, big news, Fidelity
Investments is the fifth-largest asset manager in the world, providing
financial services for $7.2 trillion in customer assets and clearing, custody
and investment services for 13,000 institutional advisory firms and brokers.
Fidelity Digital Assets will
provide these new services for institutional investors, helping to close the
gap in gaining key institutional investors for cryptocurrencies, which in turn
could very well usher in a whole new era of adoption — or at least acceptance —
of cryptocurrencies for all investors.
With Fidelity Digital Assets’ first
customers already onboarded, and general availability opening in early
2019, the launch of the new subsidiary with 100 new employees signals the
single most significant move into cryptocurrency by an institutional asset
“This is recognition that there is institutional
demand for these assets as a class,” said Tom Jessop, founding
head of Fidelity Digital Asset Services, per Forbes. “Family offices, hedge funds, other sophisticated
investors, are starting to think seriously about this space.”
FDAS will in due time help boost
the validity of cryptocurrencies on a broad scale. With the acceptance and
trust of institutions should come acceptance and trust of cryptocurrency
investment for mainstream investors. This may signal the holy grail of moments
known as the “tipping point” in any new wave of technology or society. In this
case, both apply.
What most don’t realize, however,
is that Fidelity has been interested in cryptocurrencies and their potential
for investors for a while. Its research into digital assets began with a
blockchain incubator through the Fidelity Center for Applied Technology in
2013. Fidelity Digital Assets started within this incubator, and the incubator
continues to research blockchain and digital assets.
“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 Jessop,
according to BusinessWire. “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."
Fidelity has also experimented with
mining, allowing its customers to view their digital asset balances on Coinbase
Fidelity Charitable, the company’s
donor-advised fund, began accepting bitcoin for donations in 2015, in response
to donor demand. Fidelity Charitable received $69 million in digital asset
donations in 2017, a ten-fold increase since 2016.
On April 9, 2017, Fidelity
Investments became the first financial institution to join the Initiative for
CryptoCurrencies & Contracts, a group of academic institutions and
technology companies seeking to develop blockchain technology. Fidelity Labs,
the innovation arm of Fidelity, is a member of IC3, joined by Cornell
University, the University of California at Berkeley, the University of
Illinois at Urbana-Champaign, the Technion, IBM and Intel Corp.
At Consensus 2017, Abigail Johnson,
chair and CEO of Fidelity Investments, showed great fervor for blockchain
technology during a presentation. She discussed a halcyon "future
scenario" where blockchain technologies reach their full potential through
collaboration and new services.
Johnson expounded that
"blockchain technology isn't just a more efficient way to settle
securities — it will fundamentally change market structures — and maybe even
the architecture of the internet itself,” CoinDesk
How big could Fidelity’s move be
for the cryptocurrency market? As the CEO of Binance, Changpeng Zhao (or “CZ”
as he is known), tweeted on October
21, 2018, “What happens when a fund like Fidelity allocates a mere 5% of their
portfolio to crypto? Have you calculated how much that is?”
Some on the thread estimated that figure would be about $350
Fidelity isn’t worried about the
future of cryptocurrency for investors. And they’re betting big on its success
here. This marks great progress in the movement toward institutional investment
and mainstream acceptance of cryptocurrencies worldwide.
Following this trend will
be many more goods and services offered by other institutions and new projects,
for investors both institutional and