By CCN.com: According to Ari Paul, a prominent investor in the cryptocurrency industry and the co-founder of BlockTower Capital, Fidelity has hundreds of passionate bitcoin advocates at the executive level.
Fidelity, one of the largest asset managers in the world with over $2.46 trillion in assets under management, has made a targeted entry into the cryptocurrency sector and is set to launch a crypto custodian service in the near-term.
In January, the company said in an official announcement:
“We are currently serving a select set of eligible clients as we continue to build our initial solutions. Over the next several months, we will thoughtfully engage with and prioritize prospective clients based on needs, jurisdiction and other factors.”
The involvement of major financial institutions in the likes of Fidelity, ICE, and Nasdaq in the cryptocurrency market amidst a 15-month bear market suggests that the interest in the asset class from investors in the traditional financial market still remains relatively high.
Since mid-2017, executives at Fidelity have expressed their willingness to study and learn about cryptocurrencies and their underlying technologies.
In July 2017, Hadley Stern at Fidelity told Fortune that the company had been mining bitcoin and ethereum to understand the mechanisms behind the network, consensus, and difficulty levels.
Throughout the past year and a half, Fidelity has continued to work towards understanding the asset class with the intent of providing an infrastructure to support investors in the crypto market.
On Wednesday, Paul said that the enthusiasm towards crypto runs throughout the company, at every level of seniority of the firm, sparking optimism regarding the rate of institutionalization of the crypto market.
“Fidelity’s cryptocurrency culture is bonkers. Literally hundreds of passionate advocates at every level of seniority at the firm. They have more people working on crypto than the 5 biggest crypto funds combined.”
“Their approach to custody from a security perspective is very impressive (at least from my relatively quick look.) Not many groups actively mitigating things like HSM supply chain risk.”
At this phase of the cryptocurrency market wherein some investors could doubt the long-term survivability of the asset class, the demonstration of confidence by companies in the scale of Fidelity and ICE is crucial in serving as evidence that the asset class itself is not a fad.
As Jeff Sprecher, the chairman of the New York Stock Exchange said in November of last year, cryptocurrencies will survive and bitcoin, in particular, has shown that it can endure long-lasting bear markets in the past 10 years.
“Somehow bitcoin has lived in a swamp and survived. There are thousands of other tokens that you could argue are better but yet bitcoin continues to survive, thrive and attract attention,” Sprecher said.
Previous reports have suggested that Fidelity is slowing down the process of offering crypto custodial services to the public and is not in a hurry to do so.
Speaking to The Block in March, Fidelity Digital Asset head Tom Jessop said that 20 percent of institutions surveyed by Fidelity said they are planning to expand their investments in the crypto market.
“We just completed a survey of about 450 institutions, so everything from family offices to registered investment advisors to hedge funds. It’s interesting, I think about 20% indicated that they currently allocate to digital assets with an intention to grow that,” Jessop said.
Financial institutions, especially multi-billion dollar corporations, do not aggressively move into unregulated markets unless they see significant demand or first mover advantage.
The efforts of Fidelity and other major firms indicate that they either currently see overwhelming demand from institutions or they see the asset class growing exponentially in the decades ahead.
Last modified: March 4, 2021 5:11 PM