Fidelity, which manages more than $7.20 trillion worth assets, has stated that the new subsidiary will target institutional investors such as “hedge funds, market intermediaries and family offices.” As of now, Fidelity will not offer its services to retail investors.
The press release indicates that Fidelity Digital Assets will concentrate on offering a “secure, compliant, and institutional-grade omnibus storage solution for bitcoin, ether and other digital assets.”
Tom Jessop, who is heading the newly established firm, is cited as saying that Fidelity started studying blockchain and crypto “several years ago,” and the plan to commercialize a “standalone” crypto firm started in mid-2017.
Fidelity has also highlighted the research report from Greenwich Associates which states that “70%” executives of financial institutions hope that crypto will play a role in the future of finance, yet several of them are still “sitting on the sidelines” without entering the market.
Jessop told CNBC that Fidelity Digital Asset Services will make use of all “of the resources of a big organization to bring in major players into the budding cryptocurrency sector. Notably, Fidelity is already working with “over 13,000” institutional clients.
Jessop also stated that the newly-established firm will leverage on its status as a major Wall Street officeholder, and use innovative solutions that have been “repurposed” from other divisions of its organization.
The press release also states that the firm will be using “a proven internal crossing engine and smart order router for trade execution of digital assets” for crypto trading. The firm has pointed out that such a system will “allow for execution at multiple market venues.”
There were unconfirmed reports in June suggesting that Fidelity was roping in programmers to establish a cryptocurrency exchange. Fidelity’s innovation lab has also entered into a partnership with the largest US cryptocurrency exchange Coinbase as of mid-2017 to permit clients to look at their Bitcoin (BTC) holdings alongside traditional assets in their holdings.