Fidelity set to launch crypto custodial services in March

  • By Tom Cleveland

  • February 8, 2019
  • 2:40 am BST

Crypto zealots are already getting excited over what might transpire shortly – A major titan in the institutional market may soon launch its crypto custodial services, a significant step toward attracting other big institutional players into the crypto ecosphere. Fidelity Investments has been testing its new service with live assets for months, and according to Bloomberg, the launch date is set for March.

In a statement released by Fidelity: “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 thoroughly engage with and prioritize prospective clients based on needs, jurisdiction and other factors.” The March implementation date is consistent with prior statements made by the company.

Tom Jessop, the executive in charge of Fidelity Digital Asset Services LLC (FDAS), had noted in past statements that the financial services giant was developing a crypto trading and storage platform, based on comments made by institutional clients that they would prefer to deal with a trusted partner, if and when they entered the crypto space. He had also reiterated that “These institutions require a sophisticated level of service and security, equal to the experience they’re used to when trading stocks or bonds.”

Commentators have previously highlighted what needs to happen: “Crypto industry zealots have always longed for the day that institutional traders, the ones that manage $200 million portfolios and up, would join the crypto revolution in a big way. Up to now, their participation has been in the shadows, so to speak, working through traditional brokers in the Over-the-Counter market. Their concerns mirror those of the SEC – fear of fraud and price manipulation, liquidity and price volatility, adequate security measures, and protective custodial arrangements.” Fidelity is but one of the key steps required.

Institutional customer demand has always centered upon the two major crypto programs – Bitcoin and Ethereum, but Jessop made it clear that his firm was also interested in “the next four or five [cryptocurrencies] in rank of market cap order.” When and if security tokens become the next order of business, he also said, “We are waiting for that space to develop” first.

Fidelity Investments, with its custodial service offering, and ICE, the parent company of the New York Stock Exchange, with its introduction of the Bakkt exchange, are two examples of large institutional players paving the way for banks and hedge funds to jump onboard the crypto train.

These are not the only positive developments on the crypto horizon. Fidelity and the NASDAQ are also teaming up together in the funding of ErisX, a soon to be fully regulated crypto exchange. Thomas Chippas, the CEO of ErisX stated, “With increasing financial support from leading-edge firms, ErisX stands to provide the most robust, secure and regulated digital asset offering available to both institutional and individual participants.”

The stage is set for good things to happen in 2019 in Crypto-Land, a welcomed set of events after the destruction that Crypto Winter wreaked upon the industry in 2018.