Fidelity Digital Assets

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Fidelity Digital Assets
Fidelity da.jpg
Founded 2018
Headquarters Boston, Massachusetts
Key People Tom Jessop; Michael O’Reilly, Chief Operating Officer, Fidelity Digital Assets; Peter Farland, CTO, Abigail Johnson, Chairman and CEO of Fidelity Investments
Employees 100
Products Cryptocurrency custody and trading
Twitter @digitalassets
LinkedIn Profile
Facebook fidelityinvestments
Website Fidelity Home
Releases Company News
Blog FDA Blog

Fidelity Digital Assets (FDA) is a subsidiary of Fidelity Investments focused on support for its institutional customers' holdings in digital assets.[1]

Overview

Limited at first to bitcoin and Ether, FDA offers trading and custody services for cryptocurrencies to corporations, hedge funds and other investment managers through dedicated customer services.[2]

Fidelity gained early experience with cryptocurrencies first by mining bitcoin and ether. Fidelity CEO Abigail Johnson told her audience at the 2017 Consensus, “We set up small bitcoin and Ethereum mining operations, just done in the spirit of learning” and declared the experiment to be "actually making a lot of money."[3]

The company later allowed its customers to view their bitcoin holdings at Coinbase through their online Fidelity accounts.[4] Its Fidelity Labs division, a new business and product development incubator, co-sponsored the L2 Summit with the MIT Media Lab’s Digital Currency Initiative, which focused on scaling solutions for cryptocurrencies.[5] According to the online news service The Block Crypto, Fidelity was advertising for a bitcoin mining engineer in December 2019 in order to expand its mining operations.[6]

Bloomberg reported in late January 2019 that sources with knowledge of the matter were saying that Fidelity Digital Assets would launch its custody services in March 2019. The company issued a statement at the time saying that it was already serving several clients and planned to expand its services to more customers over the next few months depending on, among other things, customers' needs and jurisdictions.[7]

In May 2019, Bloomberg published a story saying that Fidelity would begin buying and selling digital assets for institutional customers within a few weeks.[8]

Citing strong growth in interest from its corporate customers, FDA's CTO Peter Farland wrote in a November 4, 2020 blog post that the company was recruiting “more than twenty passionate and innovative engineers” as the Fidelity Investments sub expands its cryptocurrency support.[9]

Institutional crypto surveys

In May 2019, Fidelity released the results of a survey they conducted with 441 institutional investors from November 2018 to February 2019. According to the survey, 72 percent of responders prefer to buy investment products that hold digital assets, while 57 percent said they choose to buy them directly. Tom Jessop commented in an interview that he found the results interesting, because "I'd argue that no one owns dollars or euros in a fund." Jessop also said that the survey was conducted during a crypto bear market. The survey also found that 47 percent of the responders said that digital assets are worth investing in. The same percentage said that they appreciate cryptos for being innovative, and 46 percent said they like how cryptos are not strongly correlated with other asset types.[10]

On June 9, 2020, Fidelity published the results of a follow-up survey, revealing that 36 percent of its respondents across the U.S. and Europe own cryptocurrencies or digital asset derivatives. The majority of these respondents said that they owned bitcoin or a related product. 27 percent of U.S. respondents said that they were invested in some kind of digital asset (mostly bitcoin), while 45 percent of European respondents said the same. Tom Jessop, president of Fidelity Digital Assets, said that much of this activity was likely related to economic activity outside of the crypto markets, such as negative interest rates. He said that because traditional assets were not generating enough return, many investors potentially see bitcoin as a viable alternative for investment.[11] Once released, the study was widely discussed in the financial and cryptocurrency press, albeit without warnings that the results were not generally valid.[12][13][14][15] John Lothian News published an analysis of the limitations of the survey on June 11 in response to the inaccurate press coverage of Fidelity's survey.[16]

New York Trust license

New York's Department of Financial Services announced on November 19, 2019, that it granted a trust charter to Fidelity Digital Asset Services, allowing the company to provide custody and execution services to institutions and individuals.[17] On the same day, Galaxy Digital announced that it would use Fidelity Digital Asset Services as a custodian for its two new bitcoin investment funds.[18]

Bitcoin ETF

In March 2021, Fidelity Investments announced its plans to launch an exchange-traded fund (ETF) that tracks the price of bitcoin using spot prices from popular exchanges, which will be custodied by Fidelity Digital Assets. The ETF will be called the Wise Origin Bitcoin Trust. Fidelity reportedly filed a proposal with the SEC to make the ETF available for purchase by large brokers or wealth management companies.[19]

Background

Fidelity Investments (Fidelity) CEO Abigail Johnson announced the formation of Fidelity Digital Assets LLC on October 15, 2018. The fully-owned subsidiary is headed by Tom Jessop, Fidelity's head of corporate business development.[20] At the time of the announcement Fidelity was the fifth largest asset management firm in the world with $7.2 trillion in customer assets under management or administration.[21]

References

  1. ↑ ABOUT FIDELITY DIGITAL ASSETS. Fidelity Digital Assets.
  2. ↑ Fidelity Says It Will Trade Bitcoin for Hedge Funds. Wall Street Journal.
  3. ↑ One of the world’s largest financial services firms is mining bitcoins. Quartz.
  4. ↑ Fidelity Launches Institutional Platform For Bitcoin And Ethereum. Forbes.
  5. ↑ A Collaboration on Blockchain Technology. Fidelity Labs.
  6. ↑ Fidelity is hiring bitcoin mining engineer to scale its operations. The Block Crypto.
  7. ↑ Fidelity Is Said to Plan March Launch of Bitcoin Custody Service. Bloomberg.
  8. ↑ Fidelity Will Offer Cryptocurrency Trading Within a Few Weeks. Bloomberg.
  9. ↑ FIDELITY DIGITAL ASSETS' HIRING INITIATIVE. Fidelity Digital Assets.
  10. ↑ Fidelity Survey Finds Institutional Investors Are Eyeing Crypto. Bloomberg.
  11. ↑ GROWING NUMBER OF INSTITUTIONAL INVESTORS BELIEVE THAT DIGITAL ASSETS SHOULD BE A PART OF THEIR INVESTMENT PORTFOLIOS, ACCORDING TO NEW RESEARCH FROM FIDELITY DIGITAL ASSETS. Fidelity Digital Assets.
  12. ↑ Fidelity Says a Third of Big Institutions Own Crypto Assets. Bloomberg.
  13. ↑ As many as 36% of large investors own crypto assets, and bitcoin is the most popular, Fidelity says. Business Insider.
  14. ↑ Crypto’s Allure Grows for Institutional Investors: Survey. Barron's.
  15. ↑ Fidelity: Nearly 80% of institutional investors see the appeal of digital assets. The Block Crypto.
  16. ↑ “NINE OUT OF TEN DOCTORS AGREE”* – FIDELITY CRYPTOCURRENCY STUDY RAISES QUESTIONS. John Lothian News.
  17. ↑ FINANCIAL SERVICES SUPERINTENDENT LINDA A. LACEWELL ANNOUNCES GRANT OF DFS TRUST CHARTER TO ENABLE FIDELITY TO ENGAGE IN NEW YORK’S GROWING VIRTUAL CURRENCY MARKETPLACE. New York Department of Financial Services.
  18. ↑ Galaxy Digital Launches Bitcoin Funds. PR Newswire.
  19. ↑ Fidelity Plans to Launch Bitcoin ETF. WSJ.
  20. ↑ Press Release: FIDELITY LAUNCHES NEW COMPANY, FIDELITY DIGITAL ASSETS. Fidelity Investments.
  21. ↑ Fidelity Launches Institutional Platform For Bitcoin And Ethereum. Forbes.
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