Fidelity, one of the most popular investment firms in the US, is expected to launch a cryptocurrency custody service in March 2019. This information comes via Bloomberg reports, which point out that this is a plan which has been on the works since October 2018 when Fidelity launched a new company: Fidelity Digital Asset Services.
In October, Fidelity had stated that the company would provide large-capital investors such as hedge funds with Bitcoin storage facilities. As of this moment, Bitcoin custody is the only offering from the company, but Ether custody is in the pipelines too. At least three firms have shown an active interest in this service and are in talks with Fidelity.
This comes in as a welcome step for the crypto community as Fidelity is a financial powerhouse. The company manages assets worth $7.2 Trillion - and with Fidelity showing an interest in crypto custody, it shows that optimism persists in the markets. The company’s reputation in asset management is beyond suspicion! In a statement earlier this week, Fidelity commented:
“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.”
Custodial services, for the uninitiated, are a practice where a third-party firm stores the cryptocurrencies (the original two parties being, for instance, the investor and the hedge fund). While there are a large number of services which provide cryptocurrency custodial services (most popularly Xapo, which held $10 Billion of cryptocurrencies secured inside world war bunkers), the fact that a wall-street giant is offering such services would be more assuring to most investors. Custodial services ensure that the cryptocurrencies are secure and are free from theft or hacks.
In the past, names such as Bank of New York Mellon Corp., JPMorgan Chase & Co. and Northern Trust Corp. have also explored the possibility of offering a cryptocurrency custodial service, but Fidelity has become the first major name from Wall Street to offer this service. Fidelity has been a company which has always been rather supportive of Bitcoins and cryptocurrencies at large. CEO Abigail Johnson has been an active proponent of cryptocurrencies. Under her leadership, the company also started mining Bitcoins in 2015.
This move from Fidelity also makes sense at a time when the markets are at an ideal condition for institutional-grade investors to enter. Considering that Bitcoin prices (which once hit almost $20,000) are down to $3,500 - institutional investors can get the best returns on their investment - buying a large number of Bitcoins by paying a relatively lesser amount. The entry of Institutional investors is likely to boost the markets too, as large-scale buying activity would help drive the Bitcoin price higher. Once the institutional players come in, Fidelity is likely to be one of their favourites if they opt for custodial services, which most big-money players usually opt for.
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