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Billionaire Mike Novogratz’ Crypto Fund is Fidelity’s First Custodian Client

Last Updated March 4, 2021 3:49 PM
Joseph Young
Last Updated March 4, 2021 3:49 PM

Galaxy Digital, a crypto merchant bank operated by billionaire investor Mike Novogratz listed on Toronto-based stock exchange TSX-V, has become the first alpha crypto custody client of Fidelity Digital Assets.

This week, Fidelity, the world’s fourth-largest asset manager with $7.2 trillion in assets under administration as of October 2018, launched Fidelity Digital Assets, a subsidiary of Fidelity that will provide crypto custodian solutions to institutional investors and accredited investors.

Through the platform, all 27 million customers and 23,000 businesses of Fidelity will be provided with sufficient infrastructure and services to invest in the cryptocurrency market.

Demand From Hedge Funds and Institutions

In an official press release, Fidelity CEO Abigail Johnson said that the long-term mission of the firm in the sector of cryptocurrency is to increase the accessibility and improve the infrastructure surrounding the asset class.

“Our goal is to make digitally-native assets, such as bitcoin, more accessible to investors. 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.”

The core operations of Fidelity Digital Assets include assisting institutional investors such as hedge funds, pensions, and academic institutions to invest in the cryptocurrency market with appropriate institutional products.

Fidelity Digital Assets founding head Tom Jessop said  that the establishment of the company’s digital asset arm can be considered as the recognition by Fidelity of sufficient demand from institutions for cryptocurrencies.

Within less than 24 hours since its launch, Fidelity Digital Assets secured Galaxy Digital as its first custody client, a company that aims to achieve a similar objective as Fidelity to institutionalize the cryptocurrency market.

Jessop stated:

“This is a recognition that there is institutional demand for these assets as a class. Family offices, hedge funds, other sophisticated investors, are starting to think seriously about this space.”

In January of this year, Novogratz contributed $302 million to Galaxy Digital to build a full-service merchant banking business in the crypto and blockchain space. Months later, Galaxy Digital was listed on Canada’s stock market, enabling investors to directly invest in the cryptocurrency market.

Apart from its core business of investing in cryptocurrencies and blockchain projects, Galaxy Digital offers high profile investors and institutional clients consultancy to facilitate large investments into the market.

“The resulting firm will have over 70 employees with deep institutional experience spanning across technology, investing, advisory, and trading. The Firm has also invested significantly in its management, operations, legal, and finance departments,” he added.

The partnership between Fidelity and Galaxy Digital is expected to lead to clients of the Novogratz-led firm to invest in the cryptocurrency market through Fidelity, similar to how prior to the launch of Fidelity Digital Assets, clients of Fidelity purchased cryptocurrencies like Bitcoin and Ethereum through Coinbase, a partner company of Fidelity.

Future Remains Bright

The infrastructure of the cryptocurrency market, specifically pertaining to the institutionalization of the asset class, has improved exponentially in the past nine months.

Increasing efforts to strengthen the infrastructure of the cryptocurrency market suggest that regulated financial institutions are seeing solid demand for crypto from their existing client base, which could fuel the next major movement of the sector.

Featured image from Youtube/Bloomberg.